The procedure is referred to as 'Article 7', because it's set out in Article 7 of the Treaty on European Union. The Parliament has not actually just voted to sanction Hungary's government. It doesn't have the power to do this. The vote is just a trigger that kicks off the Article 7 procedure.
Why did Orban lose the protection of the centre-right in the European Parliament?
MEPs from Orban's Fidesz party belong to the European Peoples Party (EPP) group - the biggest single group in the European Parliament. Until recently, the EPP group always voted as a bloc against resolutions criticising the Hungarian government out of loyalty to their member, Fidesz.
MEPs from the EPP had become increasingly uncomfortable with Orban's attacks on rights and democracy, but it was still unclear until days before the vote whether the EPP's leadership would back him. Instead the leadership decided to support the activation of Article 7 against the Hungarian government.
It is unclear what finally tipped the EPP against Fidesz. Recently, Orban has been developing closer ties with authoritarian populist political parties like Poland's Law and Justice party and Italy's League, which are not part of the EPP group. It is likely that Orban threatened the EPP leadership that he would leave the EPP and team up with these authoritarian populists, taking his 12 MEPs, if the EPP voted in favour of Article 7. But the EPP decided to call his bluff, calculating that Fidesz would not wish to leave the largest political group in the European Parliament. In addition, Manfred Weber, who leads the EPP group in the European Parliament, perhaps saw the vote as a chance to silence his critics. Weber wishes to become the next president of the European Commission following European Parliament elections next year. But he has been criticised for consistently standing by Orban in the past, despite Orban's flagrant violation of European values. Weber can now point to his vote in favour of Article 7 as proof that he is willing to place compliance with basic EU rules above party politics.
So what happens now?
Now Hungary will be placed on the agenda of the Council of the EU. The Council is where ministers from each EU country meet. The Article 7 procedure is likely to be long and drawn out. Getting to the point where there will be sanctions involves at least three votes at three different stages in the Council.
Twenty-two of the EU's 28 governments have to vote in favour of a statement saying that they agree that there is a 'clear risk of a serious' violation of the basic rights and freedoms listed in Article 2 of the Treaty on European Union. Governments in the Council are also allowed to issue the Hungarian government with recommendations before taking this vote.
Anyone who knows the situation in Hungary will appreciate that the situation in Hungary has gone past just being a risk of a violation to being an actual violation of Article 2 values. But it's likely that the Council will start with stage one all the same.
There's no time limit for how long the Council can take with this stage. Governments could decide just to keep the issue on their agenda and drag talks out for months. We've seen this happen with the Polish government, which is also on the Council's agenda under Article 7.
Why would governments allow the procedure to get stuck here? Governments that want to protect Article 2 values are nervous about pushing a vote because they are not sure that there are 22 governments willing to use Article 7. That's because some governments are worried that one day they could be next. So, governments that are worried about Hungary and Poland might just keep things in a stage one limbo so they can keep political discussions going in the Council without needing to take a formal decision.
If the Council votes by the required majority to pass stage one, and the situation in Hungary doesn't change for the better, then the Council can decide to move to stage two and vote again. This time they need to agree that the situation in Hungary amounts to 'a serious and persistent' violation of basic rights and freedoms. But this vote has to pass unanimously (minus the country that's being examined; in this case, Hungary).
This is the particularly tricky part. Maybe governments that are sceptical about using Article 7 can be persuaded to change their minds. But Poland and Hungary have promised to protect each other and block this vote if the day ever comes. Some academics have said that the Council could get around this by taking a vote in this second stage of Article 7 on both countries at the same time. That would exclude both of them from the vote at the same time so they couldn't protect each other. It's not clear if this would be OK legally.
If there's a successful vote under stage two and things still don't improve in Hungary, then the Council could move to stage three. It's under this stage that the Council could, finally, decide to take some kind of sanction on Hungary. The decision has to pass by a 'qualified majority' vote – basically, this means 16 governments out of 28.
A sanction under Article 7 can be any measure that takes away a right that a country gets when it joins the EU. The example cited most often is that a government could lose its voting rights, which would stop it having a say on which laws the EU passes. But governments get many privileges when they join the EU, including free trade across European borders, the ability to move money and buy and sell services anywhere in the EU, not to mention being able to take part in the hundreds of meetings where laws and policies are decided. Or sanctions could be something more symbolic, like not translating EU documents into the language of the targeted government, or not promoting citizens of the targeted country to top civil servant positions.
Can the European Parliament's vote make a difference?
Even if the Council fast-tracked this procedure all the way through to stage three and imposed sanctions, it's difficult to see what it could do to help get rights and democracy back on track in Hungary. The vote has come a few years too late. By now Hungary's media is almost entirely pro-government, critical rights groups are being silenced, the election system has been rigged in favour of the ruling party and the political opposition is in disarray. If Hungary was outside the EU, the Union could dive right in there and start funding independent media, NGOs and opposition political parties. But Hungary is an EU member, and the EU isn't allowed to interfere in these matters inside its own members.
Liberties has argued that the EU should create a new fund (a European Values Instrument) to give financial support to rights activists inside the EU – like it does for activists outside Europe. This could help to increase public support for rights and democracy. But the European Commission isn't keen on the idea.
Liberties has also argued that the EU should cut European funds to governments violating fundamental values. The Commission has picked up this suggestion and a new law is pending approval in the Council. Hungary relies heavily on EU funding, so cutting financial support could force the government to change its tune. But the EU needs to find a way of doing this that hits the government without harming innocent citizens. Liberties suggested that the EU could manage pay-outs of EU funds directly to make sure they keep flowing to ordinary people, but the Commission didn't think it was a good idea.