The EU summit over the next seven-year budget of the European Union and the attached economic recovery package divided leaders and led to animosity between Hungary and the Netherlands, Hungarian media reported on July 19.

EU leaders were still in negotiations over the size of the recovery fund and the proportion between free grants and repayable loans for aid on the third day of the summit. There is also a stark division over the nature of the conditions attached to the emergency funding.

The so-called frugal states led by the Netherlands have set strict conditions for the approval of the €750bn economic recovery fund to revive Europe's ailing economies.

According to the proposal, money could be withheld from countries that fail to live up to democratic standards. This would affect mainly Poland and Hungary, two countries which are under Article-7 procedures for various breaches of EU values.

"I think we have a good chance to make a deal," Hungarian Prime Minister Viktor Orban said on Sunday, adding that "if the deal is blocked, it’s not because of me but because of the Dutch guy".

"I don’t know what is the personal reason for the Dutch prime minister to hate me or Hungary, but he is attacking so harshly and making very clear that because Hungary in his opinion does not respect the rule of law, it must be punished financially. That’s his position, which is not acceptable because there is no decision about what is the rule of law situation in Hungary," Orban was quoted as saying.

Over the weekend Dutch PM Mark Rutte made it clear that rule of law issues are needed to be resolved. Budapest and Warsaw, two countries led by conservative nationalists, have vehemently rejected the linking of the rule of law criteria to budgetary issues.

Hungary's parliament approved a resolution last week saying that financial resources from the EU should not be tied to political or ideological conditions under the label of rule of law.

Orban is bound by these conditions, PMO chief Gergely Gulyas said before the summit, adding that prime minister would have to re-submit any changes to parliament for another debate.

The Hungarian government says that rule of law issues are commonly used as political ammunition “against conservative central European governments”.

Having suffered through the communist dictatorship, Hungary’s government "highly appreciates the rule of law," the PMO leader told reporters on Thursday.

Orban has also compared the Dutch PM's proposals on rule of law criteria to those used by the communists.

The former communist regime "used unclear legal terms, exactly the same as which is written in the proposal of the Dutchman. He used Communist terms, he is not aware of that", Orban told reporters

Local media wrote that Hungarian negotiators went into the talks with a proposal that would have ensured that irregularities over rule of law issues could only be dealt with unanimity in the European Council, instead of a qualified majority. In the proposed text the world "deficiency" was replaced by "irregularity" and all references to the phrase "rule of law" were deleted.

Apparently this did not go through, and nor did Orban's proposal to get guarantees that the rule of law procedures against Hungary should be closed soon.

After failing to get his proposals through, Hungary's strongman made a surprising u-turn on Sunday, saying that if a country fails to accept the importance of the rule of law, it must immediately leave the EU.