Warsaw and Budapest seek EU funds despite national veto

"We propose that the EU uses the resources originally allocated in the 'Next Generation EU' for Hungary and Poland to create a Recovery and Resilience Fund for Polish and Hungarian municipalities so that they can drive forward a sustainable and socially just economic recovery," the letter said, referring to the recovery fund.

The municipalities said they themselves will guarantee full transparency and accountability and "full alignment" with EU values.

The municipal leaders said they "condemned" the veto of Hungarian PM Viktor Orbán and Polish premier Mateusz Morawiecki, adding that "under the disguise of anti-immigration ideology and nationalistic rhetoric, they seek to protect a political system based on unlimited power, cronyism and a wholly-manipulated public sphere".

Warsaw's Rafał Trzaskowski, from the centre-right Civic Platform - who ran earlier this year for the Polish presidency and narrowly lost to incumbent Andrzej Duda - said both the Hungarian and Polish governments were behaving in "an irresponsible and unpredictable way".

He said the "the position of our governments have nothing to do with the national interest, and run against national interests".

Trzaskowski argued the citizens of Hungary and Poland "cannot be penalised for the irresponsible behaviour of the governments", and said the EU should put a mechanism in place to allow local and regional governments to use EU funds directly.

He acknowledged that currently only around 5-10 percent of funds do not go through the national authorities, but argued that cities are best placed to cut emissions and kickstart the economy if they get EU help.

Budapest's Gergely Karácsony, who hails from a green party, Dialogue, and won the city in a surprise last year, said direct funding to cities would actually increase the effectiveness and transparency of EU funds.

He said the Hungarian and Polish governments were at war with both the EU, and with opposition-led municipalities - depriving them of funding.

"The Hungarian government's strategy is clear. If it cannot convert public money to private money and channel it to its oligarchs, it is ready to give up those funds," Karácsony said.

In February, Karacsony and Trzaskowski, along with the mayors of the other two Visegrad country capitals, Prague and Bratislava, lobbied in Brussels for direct funding of their cities, as some governments squeeze the budget of opposition-led capitals.

The mayors also presented themselves as new allies of EU integration, in countries where illiberal and populist governments have locked horns with EU institutions over the bloc's values and rule of law.

Tuesday ultimatum

A senior EU diplomat said on Monday that if Hungary and Poland do not lift their blockade on the EU budget and recovery fund by Tuesday, the EU will move ahead with alternative plans.

"We need to have an agreement or clear signals from Hungary and Poland by today or tomorrow at the latest. If we don't, we will have to move to scenario B," the diplomat said.

It means the EU would find a different way to set up the €750bn fund for the other 25 member states, to deal with the economic consequences of the pandemic.

The seven-year EU budget would remain blocked, and next year's budget would move ahead in a provisional way, preventing funding from new programs and slashing money for existing ones.

On Monday afternoon, Hungarian foreign minister Péter Szijjártó said, after meeting with his Polish counterpart, that Poland and Hungary are maintaining their veto.

"There could be a solution, you just should not link things that have nothing to do with each other," Szijjártó said.

Morawiecki and Orbán held a video meeting Monday evening.