European Commission could cut EU funds to countries violating rule of law

The “conditionality” clause is part of the agreement on the next EU long-term budget which is now set to be negotiated by the main EU institutions.
Clara Molden/PA

By Martin Banks

Martin Banks is a senior reporter at the Parliament Magazine

28 Jul 2020

Such a move would have to be approved by 55 percent of EU countries representing 65 percent of its total population.

It is argued that this requirement makes it more likely that countries like Hungary and Poland, which are facing Article 7 proceedings by the Commission over the alleged violation of democratic norms, could organise a large enough coalition to block punitive measures.

As part of the budget agreement agreed last week, the Commission is tasked with developing further proposals on the rule of law mechanism.

Hungarian pro-government media outlet Origo has reported that German chancellor Angela Merkel had allegedly agreed to put an end to the Article 7 proceedings against Hungary, a key demand of the Orbán government, during Germany’s EU presidency.

A German government spokesperson did not confirm the report but said Germany would take the process forward “in the limits of its possibilities.”

A German presidency source said the rule of law issue would be dealt with after the summer break.

“In exchange for a smaller recovery fund and higher rebates the rule of law mechanism was significantly watered down. The rule of law conditionality remains too fuzzy to constitute a real lever to bring Member States to respect what they signed up for when becoming members” Philippe Lamberts, Greens co-leader

Speaking after last week’s EU summit, which formally agreed the €750bn recovery fund and the next EU budget, Council President Charles Michel said, “We decided within the framework of the MFF and recovery fund that we want to implement conditionality.”

“It is very clear when you read the text, you have the words conditionality, rule of law, governance.”

But Belgian MEP Philippe Lamberts, co-leader of the Greens/EFA group in Parliament, is critical, telling this website, “In exchange for a smaller recovery fund and higher rebates the rule of law mechanism was significantly watered down. The rule of law conditionality remains too fuzzy to constitute a real lever to bring Member States to respect what they signed up for when becoming members.”

“As expected, the prime ministers of Hungary, Poland, Slovenia or the Czech Republic wanted to block any serious rule of law conditionality.”

He continued, “The Dutch liberal Prime Minister and the Austrian conservative Chancellor, together with the socialist prime ministers of Denmark, Finland and Sweden in tow, fought against the very principle of a common EU recovery plan; indeed, had they had their way, we would have had a much smaller plan exclusively made up of loans.”

“This would not only have made the plan useless; it would actually have hastened a potentially fatal eurozone crisis.”

“We decided within the framework of the MFF and recovery fund that we want to implement conditionality. It is very clear when you read the text, you have the words conditionality, rule of law, governance” Charles Michel, European Council President

“They missed the chance of fully conditioning the recovery plan to the EU rule of law and aligning with the objective of making Europe the global leader in fighting climate change and making our societies respect the planetary boundaries, as the Greens pushed for in each of those countries. Their insistence on cuts will not only weaken the economic impact of the recovery plan; it will primarily hurt the most future-oriented parts.”

“In terms of governance, the alarm bell procedure granted to the fiscal hawks may be a way to delay decisions but can in no way become a de facto veto, which would be totally illegal under EU law. The best way to guarantee the actual respect of the rules that should condition the investments would have been to bring Parliament in the decision process. But Council, as is generally the case, ignored the only directly-elected EU institution.”

“EU governments must prepare themselves for tough negotiations with Parliament, which will use the leverage that it has in order to limit the damage made to the original ambition by Council.”

“Parliament will press for financial aid to be linked to a strong rule of law mechanism, for long-term investment, such as in the rights and values programme, in research and development and Erasmus+, and for Parliament to be involved in the governance of reconstruction funds.”

Lamberts added, “If there is one lesson that we should have learned from Brexit, it is that when political leaders from traditional families pick up speech and act as if the EU were primarily a waste of money, they actually reinforce the centrifugal forces that alienate Europeans from one another, in a world where we more than ever need to act together in order to regain actual sovereignty.”

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