EU strikes Compromise agreement with Hungary and Poland over next long term budget

Business groups welcome long-awaited deal, but critics call ‘rule of law’ compromise a ‘capitulation’.
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By Martin Banks

Martin Banks is a senior reporter at the Parliament Magazine

11 Dec 2020

The compromise, on the long-term EU budget and the Next Generation EU recovery instrument was brokered by Germany, the current holder of the rotating EU Council Presidency, and was endorsed at an EU summit late on Thursday.

Hungary and Poland said earlier on Thursday they would lift their veto of the €1.85 trillion budget and Coronavirus recovery plan if the German-led deal was agreed by other EU members.

Both central European states were initially angry that future EU funding would be conditional on respect for the “rule of law.”

Budapest and Warsaw are at the forefront of criticism over their perceived assaults on everything from attacks on the judiciary, media freedom and the rule of law, to abortion and LGBTI rights.

The new deal still ties disbursements from the massive fiscal package to democratic and rule of law standards but, crucially, such sanctions cannot be triggered before the European Court of Justice has ruled on the legality of any new nationally introduced rules.

Under the new plan, the European Commission will refrain from implementing the legally binding rule of law mechanism while a Member State challenges its legality at the Court of Justice. This is a process that can take months, even years.

“We are satisfied with what has been achieved. For me it is a good result and there was a lot of positivity in the Council today about it” European Parliament president, David Sassoli

The new mechanism will also not come into effect until next year, despite calls for it to take immediate effect.

Speaking at a news conference on Thursday, European Parliament president, David Sassoli confirmed that an “acceptable” compromise had been found to the row with Hungary and Poland and said he hopes the European Parliament will vote on the deal next week.

Sassoli told reporters, “It is better if we have 27 member states and not 25 states agree on this because that means a common response to meet the expectations of our citizens.”

He added, “We are satisfied with what has been achieved. For me it is a good result and there was a lot of positivity in the Council today about it.”

Reaction also came from centre-right EPP Group member Christian Ehler who said, “Finally, we have achieved an ambitious and balanced budget.”

Ska Keller, leader of the Greens/EFA Group in the European Parliament, echoed Sassoli's comments and said, "This agreement is a success in the defence of the rule of law and the start of Europe's recovery from the Covid-19 pandemic.”

"We welcome the fact that for the first time in its history the EU is linking the payment of subsidies to rule of law criteria and is launching a green budget and reconstruction plan. We have tirelessly called for more tools to defend the rule of law in Europe.”

“EU funds must not be open to abuse by oligarchs and corrupt politicians. The last-minute agreement is a compromise that keeps the legal text on the rule of law mechanism unchanged and it must remain this way” Ska Keller, leader of the Greens/EFA Group in the European Parliament

"While this rule of law mechanism will not solve all the problems we face, it must serve as a basis for further action.”

“EU funds must not be open to abuse by oligarchs and corrupt politicians. The last-minute agreement is a compromise that keeps the legal text on the rule of law mechanism unchanged and it must remain this way.”

"We regret that the EU has to wait for the European Court of Justice's ruling on the imposition of sanctions and that the rule of law mechanism will not apply as early as next year. Breaches of the rule of law are going on as we speak.”

Business Europe president Pierre Gattaz said the deal was “a major step forward to supporting our economy during an unprecedented crisis and for avoiding further delays when implementing the EU recovery plan across the EU as a whole.”

Gattaz said, “The EU leaders' agreement is oxygen for Europe’s economic recovery. The endorsement by the European Council of the solution proposed on the Next Generation EU recovery fund as well as the long-term EU budget is a big relief.”

“We urge the European Parliament to now back this deal to ensure that the recovery package can be swiftly implemented across the European Union as a whole, and that focus can now shift to making sure that recovery plans are well designed, and money is well spent.”

“For the citizens of Hungary and Poland, rule of law delayed is rule of law denied. This capitulation could create an indefinite delay in the rule of law mechanism coming into force and allows autocrats in Poland and Hungary to damage the democratic system and wage wars against minorities” Statement by Hungarian citizens’ organisation aHang and Polish citizens’ movement Akcja Demokracja

Further comment comes from Christa Schweng, president of the European Economic and Social Committee (EESC), who said, "I warmly welcome the long-awaited adoption of the Multiannual financial framework (MFF) and Recovery Fund, with the rule of law as conditionality. We urgently need this strong financial stimulus to counteract the economic crisis caused by COVID-19 and to shape the post-pandemic future of the EU.” 

"There is no more time to lose. We must ensure the money from the Next Generation EU Recovery Plan reaches those in need – be it businesses, the unemployed or NGOs – as rapidly as possible. A quick launch of funding is now even more important due to the second wave of the pandemic that EU countries are currently facing."

She added, "Given the shared management of the budget, the public administrations and agencies involved must make all necessary preparations to handle applications for EU funds swiftly.”

"We now need to focus on essentials for everyone in order to help businesses survive so they can in turn provide good-quality jobs."

But not everyone is happy, including Moritz Körner, a German Liberal MEP from the Parliament’s Renew Europe Grouping, who said the text is, “in general not problematic but the clause on the Court of Justice is really bad as it could lead to a delay of “1.5 to 2 years.”  

His concern was shared by German Green MEP Daniel Freund who said, “Basically, this deal pretty much ensures that Hungarian Prime Minister Viktor Orbán continues to get EU funding for his re-election in 2022.”

In a joint statement, Hungarian citizens’ organisation aHang and Polish citizens’ movement Akcja Demokracja were particularly critical, saying “This agreement is a political decision to push through the budget and sadly, the rule of law mechanism has been sacrificed. It’s almost toothless now.”

“For the citizens of Hungary and Poland, rule of law delayed is rule of law denied. This capitulation could create an indefinite delay in the rule of law mechanism coming into force and allows autocrats in Poland and Hungary to damage the democratic system and wage wars against minorities.”

“The decision also allows Orbán to fund his next election with European taxpayers’ money and be left unpunished for his abuses.”

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