(Updates with quotes from justice commissioner and Hungary's governing party)
BUDAPEST, July 20 (Reuters) - The European Commission won't approve Hungary's recovery plan until it carries out judicial reform and guarantees that corruption cases are investigated, justice commissioner Didier Reynders said in an interview published on Tuesday.
There are systemic problems with the rule of law in Hungary, and the European Commission is ready to use all tools to protect democracy, including the suspension of EU funds, Reynders said on the hvg.hu news site.
In a report published on Tuesday, the European Commission listed serious concerns about the rule of law in Poland and Hungary.
The commission said both were undermining media pluralism and court independence. They are the only two countries in the 27-member bloc under formal EU investigation for jeopardising the rule of law.
Reynders said he would ask Hungary and Poland again to join the planned European Public Prosecutor's Office, which they have so far not done, because "without that we cannot be sure that there is sufficient protection against fraud and corruption".
He said all avenues for dialogue have been exhausted with Poland and Hungary, and this was why the commission wants to move against them.
Hungarian Justice Minister Judit Varga said on Facebook that the commission was "blackmailing" Hungary because of its child protection laws, which will not allow "LGBTQ-activists and any sexual propaganda into Hungarian kindergartens and schools".
The Commission says the measures discriminate against LGBT people.
The commission's report is "full of untrue claims that were dictated to Brussels by Soros organizations because Hungary will not give in to European liberal opinion hegemony," the governing Fidesz party said in a statement, referring to billionaire U.S. philanthropist and financier George Soros, who has long been vilified by Hungarian Prime Minister Viktor Orban. (Reporting by Anita Komuves; Editing by Nick Macfie)
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