Part I — Situation overview

On Thursday 27 August 2026 the German chancellor Friedrich Merz is hosting the Dutch, Finnish, Austrian, Danish and Swedish heads of government in Berlin to discuss the multiannual financial framework (MFF — the seven-year budgetary framework of the European Union) for the 2028–2034 period. According to the concurring reports of Politico Europe and Euractiv, the group wants a substantially smaller framework than the European Commission’s proposal of close to 2,000 billion euros: the Austrian chancellor Christian Stocker is demanding a cut of “several hundred billion euros”, on the ground that it is unacceptable to negotiate about the largest EU budget in history while member states are economising at home. According to the Finnish prime minister Petteri Orpo the level of the proposed framework is too high. The circle is politically mixed — it ranges from conservative to social democratic — so it is not an ideological but a net contributor coalition. The group wants three things at once: a smaller overall framework, a shift of spending from agriculture towards defence and security, and the building in of the condition that governments violating democratic norms should not obtain funding. According to Politico’s sources the Berlin meeting is not expected to produce concrete figures — the aim is to form a united front. The Irish presidency will put the new compromise figures on the table in October, before the summit held in the middle of the month.

In parallel with this, the president of the European Council António Costa is continuing his rival series of consultations: after the Baltic tour he is travelling to Prague. The Baltic three asked him to preserve the envelope of 131 billion euros proposed for defence and space policy; Latvia alone is claiming some 7 billion euros to offset the increase in defence expenditure and the economic loss caused by the war. Costa is at the same time urging agreement on the question of own resources — that is, of EU-level taxes: the proposed items (corporate tax, electronic waste, carbon dioxide, and the online gambling tax raised in the European Parliament) would together yield about 66 billion euros a year, and Costa calls this a precondition of the agreement. A senior EU official drew Politico’s attention to the fact that despite his rhetoric Merz has not named a single concrete figure, which may suggest that his actual demand is milder; the German domestic political situation, however — the Saxony-Anhalt state election of 6 September — narrows the chancellor’s room for manoeuvre.

MIAK’s reading: from the point of view of the assertion of Hungarian interests these few months are the last phase in which argument still has stakes. After the Irish compromise document of October member states will no longer nuance but accept or reject. Domestic public discourse, however, today typically treats the question as though the veto were a fallback solution — whereas according to the text of the EU treaty it is not: in the absence of an agreement the ceilings of the last year of the previous framework are extended automatically, that is, it is not that “there is no budget” but that the old framework figures live on, without new programmes. The Hungarian position is therefore not that there is a strong veto weapon in the background, but that a bad negotiating result and the failure to reach agreement point in the same direction: less and less flexible funding. This is the character of the problem — it is not a question of bargaining position but a question of planning.

Part II — Foundations in the literature

Before turning to the proposals, it is worth setting out the framework in which the Hungarian position can be evaluated. Articles 311 and 312 of the Treaty on the Functioning of the European Union (TFEU) provide the legal architecture of the negotiation: the Council decides unanimously on the system of own resources, and the decision enters into force only after approval in accordance with member state constitutional requirements, while the multiannual financial framework is likewise adopted unanimously — Article 312(4), however, states that in the absence of an agreement the ceilings of the last year of the previous framework remain in force. The European Commission’s publication An Introduction to EU Cohesion Policy describes the logic of cohesion allocation: regions are classified into a development category, and depending on this the EU funds stand at between 50 and 85 per cent of the total financing of a project. The remainder has to be added from national or private sources, so the narrowing of the envelope automatically carries a domestic budgetary effect. In his work Principles of Political Economy John Stuart Mill (English philosopher and economist, the summariser of classical liberal political economy) discusses the four classical canons of taxation, and, following Adam Smith, highlights the proposition that uncertainty is worse than inequality — this gives the measure for judging the Hungarian own resources position. The detailed treatment of the literature — source by source, with quotations — can be found in section 6.4 Literature in detail.

Part III — MIAK’s concrete proposal

MIAK proposes three measurable measures, all of them for the time window before the appearance of the Irish compromise document in October.

3.1 A public, scenario-band allocation calculation for the narrowing of the cohesion and agricultural envelopes (by 30 September)

There is today no publicly available Hungarian calculation of what it would mean for domestic development capacity if the cohesion chapter narrows by 10, 20 or 30 per cent. This is not a theoretical question: since EU funds cover 50–85 per cent of projects, every single percentage point of narrowing of the envelope means either a development foregone or an increased domestic co-financing need, and the choice between the two is a budgetary decision. MIAK proposes that the ministry conducting the negotiations — in cooperation between the minister responsible for the budget and the minister responsible for EU affairs — should publish by 30 September a ten- to fifteen-page scenario-band calculation: for three narrowing bands, broken down by the seven development areas, in a regional — that is, EU statistical region (NUTS-2) — breakdown, and indicating item by item which programmes would drop out first. The document is not negotiating tactics but a planning basis: the Cohesion Watch proposal of the SZ14 programme point prescribes exactly this kind of public, professional preparation before the operational programmes are drawn up, and the G1 data-driven budget programme point carries the same logic into domestic planning.

3.2 An itemised yes-or-no position on all five proposed own resources (before the October summit)

The Hungarian position on the question of own resources is today unclear, and this lack of clarity is a disadvantage in negotiating terms as well. The logical connection is inescapable: the new EU taxes urged by Costa would yield about 66 billion euros a year, and if a member state rejects this revenue side, then it has also accepted a fall on the expenditure side — one cannot argue against the taxes and for the size of the envelope at the same time. MIAK proposes that before the October summit the government should make public its itemised, reasoned position on all five items raised (corporate tax, electronic waste, carbon dioxide, tobacco, and the online gambling tax raised by the European Parliament): which it supports, which it does not, and what revenue-side or expenditure-side solution it considers acceptable in place of the rejected items. According to the classical requirement cited by Mill, uncertainty in taxation is a graver evil than inequality; this holds for the negotiating position too — a predictable “no” brings more allies than an unpredictable silence.

3.3 Treating conditionality as a planning parameter, not as a bargaining position (simultaneously with the 2027 budget planning)

The third demand of the Berlin circle is to raise the violation of democratic norms into a payment condition within the MFF regulation itself. If this comes about, then in future a separate procedure will not have to be launched: the condition will work as an automatism. According to MIAK it is not worth treating this as an adversary, because the negotiating strength for that is lacking, and because even the success of resistance would only be a postponement. The proposed approach is the logic of the A8 programme point: if conditionality becomes an automatism, then the domestic payment, procurement and control system must be brought into such a state that the automatism never starts. Concretely: every cohesion and agricultural project with a public data sheet (beneficiary, amount, purpose, deadline, performance); a mandatory, independent cost-benefit analysis for infrastructure investments above 500 million forints; and a clawback rule in the event of non-fulfilment of the target indicators. These are not gestures to be made for the sake of the European Commission — Estonia achieves the lowest irregularity rate in the Union with this same structure, and this in itself improves the quality of domestic use of funds.

The three proposals are linked by a single principle: in a multilateral bargain the weak party is the one that cannot express its own minimum expectations in figures. The veto is apparently strength, in reality it is the last resort, and because of Article 312(4) TFEU not even its outcome is favourable. Whoever uses the month of September for analysis will have something to say in October; whoever does not will in November be able only to react.

Part IV — Expected effects and risks

Dimension Expected effect Risk
Economy and the budget The scenario-band calculation can be built into the 2027 budget planning, and makes the development of the co-financing need visible The publicity of the calculation is information for the negotiating partners as well: it shows how much narrowing the Hungarian side can bear — this can be argued to be a negotiating disadvantage
Foreign policy The itemised own resources position makes the Hungarian position predictable, and opens up coalition-building with the eastern-Baltic group, which supports the larger framework The primary priority of the eastern member states is the defence envelope, not the cohesion one — the alliance is only partial, and on the agricultural chapter it may even turn the other way
Territorial development The calculation broken down by region shows which areas would be most affected by the narrowing, and makes reallocation possible in good time If the narrowing occurs and there is no domestic replacement of funds, territorial differences will grow further — the least developed regions are the most exposed
Rule-of-law conditionality Strengthening the accounting and control system improves the quality of the use of funds in itself, independently of the EU rule Too strict internal control may come at the expense of the absorption rate: if beneficiaries fear the sanction, fewer will apply — this is why simplified accounting is needed for small projects

The most sensitive question of judgement is that of publicity. A public, quantified impact analysis does indeed give the negotiating partners information about where the Hungarian pain threshold lies. Against this stand two arguments. One is that the Commission has known the member state allocation data since the detailed breakdown of June, so the underlying data of the calculation are not secret — only the domestic conclusion is not put together publicly. The other is that without a public mandate the negotiator’s position remains open to domestic political attack, and of every result it can afterwards be claimed that it is less than what could have been achieved. The second question of judgement is temporal: the proposals are tied to deadlines at the end of September and the beginning of October, which is short. If the calculation is not ready in time, a less detailed but public version is still worth more than nothing — the essential point is that there should be a basis of comparison against which the Irish document of October can be measured.

Part V — Measurability and summary

5.1 What is worth following? (proposed KPIs)

MIAK proposes the following performance indicators (KPIs, Key Performance Indicators) for monitoring — proposed measures, not government commitments:

  • Whether a public Hungarian MFF mandate appears before the October summit, with a quantified minimum expectation for the cohesion and agricultural envelopes — proposed deadline: 30 September 2026.
  • The number of itemised positions on the five proposed own resources — proposed target: a public, reasoned yes or no on all five items, before the October summit.
  • Hungarian alliance participation in the rounds of the MFF negotiation — proposed target: measurement of issue-based coalition-building under the KP17 programme point, at least three negotiating questions in which Hungary joins not a position within the V4 but a broader — for example Baltic-eastern — common position.
  • Public data sheet coverage of cohesion projects — proposed target: 100 per cent by 2027, under the A8 programme point; reduction of the irregularity rate below 0.5 per cent.

5.2 Summary

MIAK’s request to the decision-maker: let the public Hungarian MFF negotiating mandate be prepared and published by 30 September — with a scenario-band allocation calculation, an itemised own resources position and a planning answer to conditionality. The message to the public is simpler still: the EU budgetary debate is not a Brussels internal affair, but is about whether over the next seven years roads, schools and hospitals will be built from EU funding placed alongside Hungarian public money, and in what proportion. This is being decided now, in September and October, not in 2028.

Two MIAK foundational values are in play. Data-drivenness, because this is the policy question in which negotiating strength depends literally on the existence of a calculation: one cannot argue seriously for the size of an envelope without someone having calculated the domestic consequences of its narrowing. And openness, because a public mandate is addressed not only to the negotiating partners but also to domestic local authorities, businesses and research institutions, whose development plans for the next seven years are determined by this framework — and who today know essentially nothing about this process. Here the two values point in the same direction: the negotiating position that can be defended publicly is as a rule also the better prepared position.

Part VI — Justifications and further sources

6.1 The framing of the press, spectrum by spectrum

The Brussels specialist press carried two clearly distinct narratives about the same day. Politico Europe framed it from the direction of domestic political constraint: already in the opening the article establishes that Merz is becoming ever more unpopular at home and is threatened with defeat at the Saxony-Anhalt state election of 6 September, and then it also relativises the chancellor’s demand by quoting a senior EU official — “he has never named a figure, and this is important”. This framing presents the Berlin appearance as a domestic political necessity rather than as a firm negotiating position, and separately highlights that Spain opposes both the cut and the curtailment of the agricultural chapter. The paper also brings in the question of own resources: it indicates that the traditional resistance of the northern and eastern member states to EU taxation powers appears to be weakening.

Euractiv, by contrast, approaches from the direction of the structural bargain. The piece on the Berlin meeting identifies the participants as net contributors, and records precisely the three demands of the group — a smaller framework, new priorities (competitiveness, defence), and rejection of common debt — as well as the mid-October timetable of the Irish presidency compromise document. In a separate article the paper carries the conclusion of Costa’s Baltic tour, where the viewpoint of the eastern flank appears: the Lithuanian president Nausėda asks for an increase in the defence and military mobility framework, while the Latvian head of government recalls that Latvia already today invests in the defence industry of the net contributors — including the Germany urging the cut in the framework. For the Hungarian reader this juxtaposition is the most important element: it shows that the negotiation is taking place not along a “Brussels versus member states” axis but between the interests of the net contributors and of the eastern flank.

The Hungarian press did not carry this day as a lead item — among the ten topics of today’s domestic monitor the MFF negotiation does not appear. This absence is in itself a policy observation: the preparatory phase of the decision on the next seven-year framework does not belong to daily public discourse here at home, while its stakes are orders of magnitude greater than those of most of the matters that do make it onto the agenda.

6.2 Facts and data

Data Value Source
The Commission’s proposal for the 2028–2034 framework close to EUR 2,000 billion Politico Europe, 26 August 2026
The composition of the Berlin group Germany, the Netherlands, Finland, Austria, Denmark, Sweden Politico Europe / Euractiv, 26 August 2026
The annual yield of the proposed new own resources approx. EUR 66 billion Euractiv, 26 August 2026
Proposed defence and space policy envelope EUR 131 billion Euractiv, 26 August 2026
Latvia’s claim from the next framework approx. EUR 7 billion Euractiv, 26 August 2026
Germany’s share of the payments into the EU budget approx. one quarter Politico Europe, 26 August 2026
The expected time of the Irish presidency compromise document October 2026 (before the mid-month summit) Politico Europe / Euractiv, 26 August 2026
The cohesion co-financing rate EU funds cover 50–85 per cent of the total financing of a project, depending on the development category European Commission: An Introduction to EU Cohesion Policy

The table makes two connections visible. The first is the relation between the own resources item of 66 billion euros and the demand for a cut of “several hundred billion euros”: projected onto a seven-year cycle the order of magnitude of the own resources is some 460 billion euros, so settling the revenue side would in itself cover a significant part of the net contributor demand — which is why the two debates are not independent of one another. The second is the significance of the co-financing rate: since EU funds cover at most 85 per cent, the exposure of the domestic budget changes not in proportion to the narrowing of the framework but less favourably than that, if we wish to replace the developments foregone from national sources. This is the connection that the proposed scenario calculation has to quantify.

6.3 Policy dimensions

  • Foreign policy (programme points) — the KP17 issue-based coalition-building programme point is directly applicable: in the MFF negotiation the Hungarian interest lies closer to the argumentation of the eastern-Baltic group (a larger framework) than to that of the net contributor bloc, even if on individual sub-questions — for example in defence of the agricultural chapter — the map of alliances is different; the KP11 strategic balance policy provides the framework for this.
  • Economy (programme points) — the G1 data-driven budget prescribes the planning discipline that proposal 3.1 requests; the G23 public debt sustainability framework is concerned because replacing lost EU funding involves domestic borrowing, so the MFF outcome is a direct item on the debt path.
  • Territorial inequality and rural policy (background material) — the regional distribution of cohesion funds determines which areas are most affected by the narrowing of the envelope; the least developed regions receive at once the highest co-financing rate and the fewest alternative sources.
  • Transparency and anti-corruption policy (programme points) — the A8 cohesion accountability point provides the entire content of proposal 3.3.

6.4 Literature in detail

6.4.1 Treaty on the Functioning of the European Union (TFEU), Articles 311–312

The legal architecture of the negotiation is determined by two articles. Article 311 provides for the system of own resources, and sets two mutually reinforcing limits:

“The Council, acting in accordance with a special legislative procedure, shall unanimously and after consulting the European Parliament adopt a decision laying down the provisions relating to the system of own resources of the Union. […] That decision shall not enter into force until it is approved by the Member States in accordance with their respective constitutional requirements.”

The introduction of new EU taxes therefore requires not only unanimity in the Council but also member state — in Hungary’s case parliamentary — approval. In the own resources debate the Hungarian side thus has a double veto point, while on the expenditure side it has only one.

Article 312 relates to the multiannual financial framework, and its paragraph (4) contains the rule that is as a rule left out of domestic public discourse:

“Where no Council regulation determining a new financial framework has been adopted by the end of the previous financial framework, the ceilings and other provisions corresponding to the last year of that framework shall be extended until such time as that act is adopted.”

It is this sentence that rewrites the meaning of the veto. In the absence of an agreement the EU budget does not stop: the ceilings of the last year of the previous framework are extended — without new programmes, new allocations and chapters adjusted to changed priorities. For a net beneficiary member state this is a bad outcome: the old framework figures remain at nominal value while the price level does not, and development programming comes to a halt. From this follows the central proposition of this entry: for Hungary the failure to reach agreement is not a negotiating reserve but an independent risk — the assertion of interests therefore has to be carried out in the substantive phase, in the autumn.

📖 Source: Treaty on the Functioning of the European Union (TFEU), Articles 311 and 312

6.4.2 European Commission: An Introduction to EU Cohesion Policy

The publication summarises the allocation logic of cohesion policy, and records two elements that are indispensable for understanding the Hungarian stakes of the present negotiation. The first is co-financing:

“Cohesion Policy is a catalyst for further public and private funding, not only because it obliges Member States to co-finance from the national budget, but since it also creates investor confidence.”

The second is the differentiation of the rates by level of development: regions are classified into more developed, transition and less developed categories on the basis of gross domestic product (GDP), and depending on the category the funds stand at between 50 and 85 per cent of the total financing of a project. The document also records the eligibility threshold of the Cohesion Fund: those member states benefit from it where GDP is below 90 per cent of the average of the 27-member Union.

This structure explains why the domestic effect of a narrowing framework is not linear. If the cohesion chapter narrows, the less developed regions lose the most — for it is there that the EU financing share is highest, so it is there that the gap to be filled from domestic sources is largest. These same regions have the smallest own development capacity. According to the data of the publication, GDP per capita in the poorest EU regions rose from 60.5 per cent of the EU average to 62.7 per cent within a few years — catching up is therefore slow and sensitive to the continuity of funding. MIAK’s proposal 3.1 asks for a calculation broken down by region (NUTS-2) precisely because on this question the national average conceals what matters.

📖 Source: European Commission: An Introduction to EU Cohesion Policy 2014–2020

6.4.3 John Stuart Mill: Principles of Political Economy

In the book on taxation Mill cites and discusses Adam Smith’s four classical canons: the tax should be proportionate to ability to pay, it should be certain, it should be levied at a time and in a manner convenient for the payer, and it should not take more than what flows into the state treasury. In the discussion of the second canon there appears the proposition which is directly applicable to the present negotiating situation:

“The certainty of what each individual ought to pay is, in taxation, a matter of so great importance, that a very considerable degree of inequality, it appears, I believe, from the experience of all nations, is not near so great an evil as a very small degree of uncertainty.”

The argument originally relates to the taxpayer, but its structure can be transferred to the member state negotiating position. In the own resources debate five concrete taxes are on the table, and it is in every member state’s interest to know who supports what — because the map of alliances is put together from this. A member state which says neither yes nor no to any item does not take up a neutral position but an unpredictable one: no coalition can be built with it, and none can be built against it either. According to Mill’s proposition it is exactly this that is the worst outcome — the cost of uncertainty exceeds that of representing a clear position even if it is less favourable. MIAK’s proposal 3.2 follows this logic: the itemised yes-or-no position improves the Hungarian negotiating situation even if on some items the answer is “no”.

📖 Source: John Stuart Mill: Principles of Political Economy

6.5 International comparison

In the quality of negotiating preparation the difference between member states is striking. The Netherlands and Denmark have for decades published a prior, quantified budgetary position document before MFF cycles, and tie the parliamentary debate to it as well — it is from this that the negotiating discipline of the net contributor bloc derives, not from some special diplomatic ability. The Baltic states are now following the same pattern from the other side: Latvia does not ask for more funding in general terms but names a concrete sum (some 7 billion euros) and gives its reasons (increase in defence expenditure, wartime economic loss). The Lithuanian president similarly lists the priorities item by item: defence, military mobility, protection of strategic infrastructure. This kind of argument leaves a trace in the compromise document of October; a general objection of principle does not.

The SZ14 programme point brings the Polish example from the implementation side: in the 2014–2020 cycle Poland absorbed some 95 per cent of the allocation falling due by the deadline, which is primarily the consequence of the quality of programming preparation. The lesson holds in both directions: in the negotiating phase it is the quantified position, in the implementation phase it is prepared programming that brings results — and the two are two sides of the same analytical capacity.

Foreign policy

  • KP11 — Strategic balance policy
  • KP17 — Issue-based coalition-building in the EU

Economy

  • G1 — Data-driven budget
  • G23 — Public debt sustainability framework

Social policy

  • SZ14 — Cohesion Pillar 2.0 — maximum use of the Hungarian allocation

Transparency and anti-corruption policy

  • A8 — Cohesion policy accountability

Proposed new programme point: Public EU negotiating mandate — for the Foreign policy area: before the negotiation of every multiannual EU budgetary cycle the government should publish a mandate document containing a quantified minimum expectation and submitted to parliamentary debate.

6.7 List of sources

Press sources (MIAK foreign press monitor, 27 August 2026 — topic 1):

Knowledge base references:

  • 📖 Treaty on the Functioning of the European Union (TFEU), Articles 311 and 312
  • 📖 European Commission: An Introduction to EU Cohesion Policy 2014–2020
  • 📖 John Stuart Mill: Principles of Political Economy

MIAK internal materials:

  • MIAK policy area: Foreign policy (programme points; programme point ID: KP11, KP17)
  • MIAK policy area: Economy (programme points; programme point ID: G1, G23)
  • MIAK policy area: Social policy (programme points; programme point ID: SZ14)
  • MIAK policy area: Transparency and anti-corruption policy (programme points; programme point ID: A8)
  • MIAK policy area: Territorial inequality and rural policy (background material)
  • MIAK foreign press monitor, 27 August 2026 — topic 1, score: 92/100

Supplementary public data sources:

  • European Commission — the MFF 2028–2034 proposal package and allocation tables by chapter
  • European Council — communiqués of Costa’s “Tour des Capitales”
  • European Court of Auditors — opinion on the system of own resources
  • Eurostat — regional GDP per capita (NUTS-2)
  • KSH and the Ministry of Finance — EU transfer time series

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