Hungary and Poland threaten to block funding for EU’s recovery plan
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Hungary and Poland threaten to block funding for EU’s recovery plan

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The two countries blocked yesterday a decision on the financing of the budget for 2021 – 2027, including the recovery package for dealing with the coronavirus crisis. The European Commission still hopes that a solution will be found.

“We are 100 % focused on finding a solution to put the next multi-annual framework (MFF) in place by 1 January 2021,” a Commission spokesperson said at yesterday’s virtual press conference. The chief spokesperson added that it is up to the German EU presidency to find a solution to the current crisis in the Council negotiations on next budget.

He declined to speculate on when a solution will be found and on the deadline for an agreement which would enable the transfer of funding to the member states next near. “We are focused on finding a solution,” he repeated. “We have 25 member states behind us.”

A decision was taken by the European Council last July on next multi-annual framework (MFF), the Recovery and Resilience Facility, the key part of Next Generation EU, and a mechanism linking funding to the EU member states to compliance with the principles of the rule of law (Rule of Law conditionality).

Last week, the European Parliament adopted a regulation on the protection of EU’s budget allowing for the suspension or reduction of payments in case of the rule of law is not respected by the member states. The regulation includes mechanisms to protect the final beneficiaries or recipients of EU funding, for example civil society organisations, to ensure that they are not punished for the actions of their governments.

Hungary and Poland are two countries where the rule of law has been undermined in recent years, according to the Commission. Both countries are facing so-called article 7 proceedings and risk their rights of EU membership to be suspended.

Their governments have sent letters to the Commission complaining about the rule of law conditionality, which might affect their EU funding, and threatening to veto the EU budget. According to the spokesperson, the Commission is still looking at the letters.

In an interview last week, Hungarian Prime Minister Orbán said that, “If we adopt this legislation, which was drafted by the European Parliament and the German Presidency, we will turn the European Union into a Soviet Union. This draft seeks to blackmail countries on an ideological basis, and it cannot be appealed.”

The Hungarian government continues to spread conspiracy theories and to claim that politicians in Brussels “were fed from the palm of George Soros’ hand”. He was referring to financier and philanthropist Soros, a native of Hungary who survived the Holocaust and has been supporting the democratic transition in Eastern Europe.

“The future of millions of Europeans’ health, jobs and savings rests on the Recovery Package and the MFF being adopted as soon as possible,” commented MEP Philippe LambertsPresident of the Greens/EFA group in the European Parliament. Viktor Orbán and Jarosław Kaczyński are holding the COVID recovery hostage just so they can continue to undermine the rule of law.”

In the provisional deal between the Parliament and the Council, MEPs succeeded in ensuring that the rule of law conditionality does not only apply when EU funds are misused directly, such as cases of corruption or fraud. It will also apply to systemic aspects linked to EU fundamental values such as freedom, democracy, equality, and respect for human rights including the rights of minorities.

The Commission, after establishing the existence of a breach, will propose to trigger the conditionality mechanism against an EU government after having taken into account the information made by the member state concerned. The measures proposed must be proportionate.

The Council then will have one month to adopt the proposed measures (or three months in exceptional cases). The Commission will use its rights to convene the Council to make sure the deadline is respected. Acting by a qualified majority, the Council may amend the Commission’s proposal and adopt the amended text as a Council decision.

The issue of the voting procedure in the Council has been subject to interpretations.  It appears that the deal requires the Council to agree to limiting the disbursement of EU funding with a qualified majority, a voting method which is less strict than what the Commission and the Parliament proposed. Under the original proposal, the Council would have had to reject a decision by “reverse qualified majority voting”.

“Blocking a qualified majority vote is easier, albeit by no means easy, than gathering a qualified majority. Under qualified majority voting, four states representing at least 35% of the EU population can form a blocking minority,” commented Peter Kreko, Director of Political Capital Institute in Hungary. He considers the rule of law conditionality a considerable defeat for the Hungarian and Polish governments.

Asked by The Brussels Times if the change would affect the chances of the Council adopting financial measures against member states that disrespect the rule of law, a Commission spokesperson replied that the Commission welcomed the political compromise reached between the Parliament and the Council.

“An effective rule of law conditionality is important for protecting the EU budget,” he said. “We believe that the agreed text closely reflects the intended purpose of the Commission’s proposal in 2018. For the first time, EU funding will be protected against generalised deficiencies as regards the rule of law in the member states.”

M. Apelblat
The Brussels Times