BUDAPEST: Gergely Gulyas, the chief of staff to Prime Minister Viktor Orban, said Thursday that Hungary's government is ready to resolve its dispute with the European Commission over worries about the country's rule-of-law situation.

The European Commission reportedly sent an official letter to Hungary on Wednesday, kicking off a procedure that might result in the freezing of European Union (EU) subsidies. The European Commission can withdraw financing to member states that break the bloc's rule-of-law norms, according to a procedure agreed by the European Commission in late 2020.

Gulyas said in a statement on Thursday that the government "welcomes" the letter and that it has already been analysed.  He stated that the administration does not believe that the start of the rule-of-law procedure is warranted and that there are several points on which it would not compromise. Hungary's decision to keep out of the Ukraine war is one of them.

Despite this, he said, "there is nothing stopping it" from signing a deal on the release of recovery funds, referring to Hungary's USD 7.56 billion share of the 800-billion-euro 'NextGenerationEU' recovery package, which the bloc has refused to sign off on for nearly a year due to rule-of-law concerns.  "All of the issues identified in the letter are issues that we've been debating with the Commission for months," Gulyas added.  He acknowledged that progress has been made, but that "a lot of points remain open."

Hungary's government now has two months to react to the Commission's letter and provide resolution proposals. The so-called "conditionality mechanism" will be stopped if the Commission is pleased with the response. If not, the process might drag on for another six to nine months, culminating in a proposal to the EU Council to halt payments to Hungary.

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