Weekly newsletter

Details on Why Orbán Gov’t Finds New Deal on Linking EU Funds to Rule of Law Unacceptable

Péter Cseresnyés 2020.11.06.

Following a trialouge negotiation, the Council of the EU and European Parliament has reached an agreement on a new rule-of-law mechanism allowing Brussels to cut funding over the violations of democratic values in member states. The new deal is much stricter than the one presented in September preventing Poland and Hungary from simply blocking the suspension of EU funding transfers. Therefore, it is not suprising that the Orbán government has already threatened to veto the EU’s entire upcoming seven year budget deal.

Following a long summit in the summer, European leaders agreed to a €1.8 trillion budget and coronavirus recovery package. But the deal needed the approval of the EP, and many of the MEPs were persistent to link respect for rule of law to EU funding transfers to member states. Poland and Hungary, however, have threatened to block the legislation necessary to roll out the recovery package.

At the end of September, the German EU Presidency tried to come up with a compromise, which in many ways represented a downshift from previous plans. The latest deal is basically the renegotiated and strengthened version of that proposal agreed upon during the ’trialogue negotiations’ between representatives of the Council of the European Union, the European Commission, and the European Parliament.

EU Funds Tied to Rule of Law Criteria: Gov't Furious, Momentum and Verhofstadt Happy
EU Funds Tied to Rule of Law Criteria: Gov't Furious, Momentum and Verhofstadt Happy

Leaders of the EU Member States have agreed with the European Parliament to make the next seven-year budget cycle conditional on the rule of law, which concluded a historic, three-week series of talks. With this decision, the Hungarian government seems to have lost a serious battle in Brussels, as the parliament managed to enforce most […]Continue reading

The new law does not only apply when EU funds are misused directly, such as in cases of corruption or fraud. It will also apply to systemic aspects linked to EU fundamental values “that all member states must respect, such as freedom, democracy, equality, and respect for human rights including the rights of minorities.”

One major change is that sanctions could not only be initiated for systemic breaches of the rule of law, but also for individual cases, even if there is only a possible threat to the degradation of democratic values, such as a threat to the independence of the judiciary. Parliament’s negotiators also insisted that tax fraud and tax evasion are considered possible breaches.

There will also be a standalone article detailing exactly what constitutes a breach of the rule of law.

Should the mechanism be triggered, the Commission has to send a notification to the Member State suspected of breaching the rule of law, who then has three months to reply. If the Commission doesn’t find the EU member’s defense convincing, it can submit a proposal to the Council of the European Union as to exactly how much money should be withdrawn from the given Member State. It is then up to the Council of the EU to decide by qualified majority within one month with a possible two month extension.

Accepting the sanctions will require the qualified majority of the Council of the EU, which means that 55 percent of the members state accounting for 65 percent of the EU population has to agree.

Justice Minister: Hungary Govt Could Be 'Forced' to Reject EU Budget
Justice Minister: Hungary Govt Could Be 'Forced' to Reject EU Budget

The Hungarian government could be “forced” to reject the next European Union budget and the bloc’s coronavirus recovery package if access to EU funding is “tied to political and ideological requirements”, Justice Minister Judit Varga told a press conference on Thursday. Following an agreement between the EU presidency and the European Parliament on new conditions […]Continue reading

This means that western and northern EU states that are the most vocal on rule-of-law issues could not push through sanctions on their own. On the other hand, and more importantly, the new agreement will prevent Poland and Hungary to veto together the suspension of the EU funding transfers.

Thus, the new deal tries to fix two major concerns of some of the MEP’s over the Article 7 proceeding (initiated against Poland and Hungary in 2017, 2018 respectively): the lack of clear deadlines, and the requirement of an unanimous decision from the Member States.

As a result, the two countries have already threatened to veto the EU’s entire upcoming budget deal if the new agreement remains unchanged as it is still subject to final approval from a majority of member states.

Hungary’s Justice Minister Judit Varga accused the European Parliament of making a “reckless and mistaken move” by pushing for a stronger mechanism. She called it unacceptable that “despite the current epidemic situation and the serious challenges facing the European economy, the European Parliament will not stop blackmailing Hungary politically and ideologically.”

“There is no agreement on any element of the EU budget until all its elements have been agreed upon,” she emphasized on Facebook on Thursday.

For now it is unclear what happens next as the negotiations on the next seven-year budget and recovery package will now continue. But it is certain that the long political struggle will continue.

Featured photo by Zoltán Fischer/MTI