Rule-of-law breaches can be addressed more effectively since the EU’s legal framework was bolstered by new protective mechanisms, according to an audit report published last week by the European Court of Auditors (ECA).
However, the new mechanisms do not yet guarantee full protection of the EU’s financial interests and do not cover the common agricultural policy (CAP), the auditors concluded.
The rule of law situation in some EU member states, in particular Hungary and Poland, has deteriorated over the past decade. The audit aimed to follow up on the measures taken by the Commission using the new instruments to protect the EU's financial interests against breaches of the principles of the rule of law.
The audit covers the Conditionality Regulation together with relevant provisions under the Recovery and Resilience Facility (RRF) and the 2021-2027 Common Provisions Regulation (CPR) covering cohesion policy funds. The audit sample included Bulgaria, Greece, Hungary, Italy, Poland and Romania,
These countries have been subject to proceedings under some or all of the new mechanisms (Hungary and Poland) or rule of law challenges in their recovery and resilience plans (Greece and Italy). Romania and Bulgaria were included because they had been subject to the Cooperation and Verification Mechanism (CVM) since they joined the EU in 2007 (see figures 3 and 4 in the report).
“The EU’s new rule-of-law safeguards are a commendable step forward”, said Annemie Turtelboom, the Belgian ECA member who led the audit. “But there are chinks in the armour: the rule of law is a fundamental value of the EU, which certainly merits a more watertight system.”
The conditionality mechanism has until now only been applied once, in December 2022 in relation to Hungary. The auditors found that the Commission had set out its reasoning for using the mechanism. However, it did not provide such reasoning for cases where it had identified potential rule-of law breaches in other member states but not applied the measures under the conditionality regulation.
For countries other than Hungary, the auditors could not always verify the reasons for using one tool rather than another. They therefore concluded that the European Commission had not transparently demonstrated that the EU’s financial interests are properly protected across all member states.
Political considerations at play
The regulation entered into force in January 2021. Guidelines on how to apply the conditionality mechanism were issued only in March 2022 after the European Parliament had protested against the delay. The mechanism was triggered for the first time in September 2022 against Hungary. The final decision to suspend EU funding was taken in December 2022.
The auditors admitted that the process had been lengthy but claimed that it was timely compared to Article 7 of the EU treaty. This procedure was launched in 2017 against Poland and in 2018 against Hungary but until now the Council has not voted on the cases. According to Article 7, the voting rights of a member state can be suspended as a last resort (“the nuclear option”).
Certain aspects of the conditionality mechanism are difficult to apply - in particular the requirement to establish a sufficiently direct link between breaches of principles of the rule of law and the EU’s financial interest.
The audit team did not exclude that political considerations may play a role in the decision-making, as for example in December last year when the Commission decided to release funds to Hungary before an important vote on Ukraine’s EU application which required unanimity in the European Council.
“Basically, we do highlight in our audit report that blocking EU funds may provisionally hamper some EU programs, with potential negative effects on citizens in the short term,” the audit team told The Brussels Times. “But we want to be clear that this would be the responsibility of the national government not fulfilling its obligation, not the one of the European Commission applying the law.”
“On the long run, anything contributing to improve the rule of law situation is in the upmost interest of the citizen. We must remind that the rule of law is a cornerstone on which the EU is built. When one of our fundamental values is as stake, standing for it should be the priority.”
Commission welcomes the audit
ECA issued a number of technical recommendations to the Commission to ensure the necessary administrative capacity to apply the conditionality regulation in an effective way and to report and monitor rule of law breaches by the member states. It goes without saying that any proposal to lift budgetary measures should be based on solid evidence.
The auditors were not convinced that this was the case when the Commission closed the CVM for Bulgaria and Romania in September 2023 despite remaining rule of law concerns. The Commission disagrees.
In its reply to the audit, the Commission accepted most of the recommendations, at least partially, but added reservations. That said, it welcomed the audit. “The rule of law is one of the founding values of the EU and its respect and preservation across the Union is a priority for the Commission along with the protection of the Union’s financial interests,” a Commission spokesperson commented.
In particular, it welcomed ECA’s assessment that the launch of proceedings regarding Hungary in 2022 under the Conditionality Regulation “was based on a thorough qualitative assessment and in line with the requirements set out in the Regulation, and was effectively coordinated with specific mechanisms under the RRF and the CPR.”
The Commission says that it will continue to gather and rigorously assess information indicative of breaches of the principles of the rule of law in Member States in line with the applicable legislative framework. Based on a more established case practice, the Commission may also review the Guidelines on the Conditionality Regulation to take account of relevant developments.”
M. Apelblat
The Brussels Times
