Budget stand-off over rule of law ends in neither victory nor defeat for Hungary and Poland.
Hungarian prime minister Viktor Orban could not have been clearer about the EU’s new regulation-making access to EU funds conditional on respect for the rule of law. He would not accept it, he told state radio on December 4. He dismissed the idea of a statement of reassurance from EU leaders about how the new rule would be applied. “Adding some declaration — as some little reminder stuck on a pinboard — won’t work.”
A week later at the EU summit, Mr Orban and his Polish counterpart Mateusz Morawiecki agreed to exactly such a declaration in return for dropping their blockade of the EU’s €1.8tn budget and vitally important coronavirus recovery fund. The financial package, the EU’s landmark achievement of 2020, is back on track. And a new mechanism allowing the EU to cut off funding to members that flout the rule of law will come into force next month, adding a much-needed tool to the bloc’s malfunctioning kit for upholding fundamental values.
“It’s a total defeat for Orban and a victory for democrats in Europe,” said Klara Dobrev, a Hungarian opposition MEP.
As Mr Orban previously acknowledged, a political declaration cannot change the legal force of the regulation agreed in November by the European Parliament and member states. The declaration largely restates the principles of the legislation: it will be applied in a targeted way according to objective criteria and any sanction will be proportionate to the breach.
The one big concession is a delay. Action against errant member states will not start until the European Court of Justice has ruled on an inevitable application by Budapest and Warsaw to have the regulation struck out as contrary to the EU treaties, a process that can take eight to 12 months.
The philanthropist George Soros said it was a “true coup” for Mr Orban that implementation could be delayed until after the Hungarian parliamentary elections in 2022, giving him “ample time” to change laws and constitutional provisions to protect the financial interests of his circle.
If Ms Dobrev and fellow MEPs have their way, the delay could be much shorter. They will apply for an expedited ECJ review akin to that used when Britain activated the Article 50 EU exit clause. It took the ECJ under three months to rule following a request from a Scottish court.
In any case, it will take the European Commission several months to draw up a methodology for examining compliance before building a watertight legal case for any breach. If the European court quickly upholds the new rule of law mechanism, the pressure will build on Brussels to act against Budapest in the run-up to the elections. The question is whether it would have the political will to initiate such a serious escalation. Under the presidency of Ursula von der Leyen, the commission has shied away from confrontation.
Some legal experts say EU leaders overstepped their role by giving the commission instructions on how to interpret the new rule even if their declaration is not binding.
Ms Dobrev said she hoped the commission could quickly build a case. For example, the ECJ has already ruled that Poland is failing to protect judicial independence, proving, she said, an effective legal remedy against misspent EU funds cannot be guaranteed. But the commission is wary of taking such a sweeping approach, which should be the job of the member states but which they have been reluctant to pursue. Instead Brussels will want to tackle narrower, more concrete breaches and hope that national capitals, especially Berlin, take a more robust stand against autocrats in their midst. “It is not a silver bullet,” said one official.
“It is part of a salami slice method to put sufficient pressure [on a country] to stop certain things. The question is whether we will have sufficient political pressure as well.”