Visegrad Four 'nothing to hide' on rule of law issue

"We look forward to such debates, we don't have anything to hide, we have no fear to do that," he added after a conference on the EU budget.

Hungary holds the rotating presidency of the Visegrad Four, a loose cooperation of the Czech Republic, Poland, Slovakia and Hungary.

The EU executive in its 2 May proposal on the next long-term EU budget outlined controversial plans for linking the distribution of EU funds to the well-functioning of justice systems.

Poland and Hungary, which have had rule of law run-ins with the commission, feel targeted by the proposal and question the plan's legal basis.

Takacs said Hungary needs to analyse if the proposal complies with the EU treaty and whether it is equally applicable to all member states.

He said Hungary had some legal concerns that the commission might be trying to create new 'competencies', that is, centralised powers for Brussels.

"Everybody has to respect the rule of law, not only the member states, but also the institutions, the European Commission and the European Parliament as well," he added.

Takacs added that Hungary is the one of the "most audited countries" and that Budapest has "proof" that its justice system is in order.

Peter Javorcik, Slovakia's ambassador to the EU said at the same event that - as a principle - Bratislava has no problem with rule of law as a condition for the implementation of EU funds, adding it has to apply to all EU funds and all countries.

'Think twice'

Justice commissioner Vera Jourova last week told EUobserver that member states should think twice about whether the rule of law conditionality is something they, particularly Hungary and Poland – where government action had raised rule of law concerns in the commission - will refuse to guarantee.

"If I want to get the EU money I have to guarantee that there will be the court which will deal with fraud and corruption. I think if some country says we cannot guarantee it, then we have a problem and this is what I will try to explain again and again in Poland, in Hungary, in whatever member state," Jourova said.

"I will do my best to convince the member states to agree with it because this is important, this is not about EU money only, it is about trust of the taxpayer and about some fairness in the system about the division of obligations and rights," she added.

Poland has been at the forefront of accusing the commission of overreaching its competencies, calling the proposal a "massive power grab".

Hungary has said the proposal's legal base is questionable and the conditions for triggering the suspension of EU funds is too vague.

According to the commission's proposal the EU executive could launch the procedure if it detects "generalised defences" in the member states' judiciary that would impact the use of EU funds.

"Generalised deficiencies" could mean national authorities not following up damning reports by the EU's anti-fraud agency, Olaf, or judges systematically being biased, or judgements not being enforced in practice.

The commission would have the power to suspend EU funds if the member state does not address these problems, and the council - the body of member states - could only stop it with a qualified majority.

Officials from Belgium, Germany, France, Sweden, however expressed support for the new instrument last week.

The commission launched the so-called Article 7 sanctions procedure against Poland last year for threatening the independence of its judiciary.

While Hungary has settled its earlier rule of law issues with the commission, the European Parliament's civil liberties committee in a draft report proposes launching the Article 7 process, which in theory can lead to the suspension of the voting rights of a member states.

The European Parliament's budget control committee last month said in its opinion that the "current level of corruption, the lack of transparency and accountability of public finances, and the ineligible expenditure or overpricing of the financed projects affects union funds in Hungary", and supported the call for launching the Article 7 procedure.

No member states has been sanctioned before under Article 7. Indeed, the EU has been reluctant to use any sanctions in its toolbox against member states, other than the so-called infringement procedures for specific breached of EU rules.

Commenting on the rule of law conditionality Zsolt Darvas, a senior fellow at the Brussels-based Bruegel Institute pointed out last week to an audience at the European Economic and Social Committee that while the proposed conditionality makes sense, the commission has not used its numbers-based economics sanctions either, for instance for macroeconomic imbalances in member states, arguing a more political tool might be even more difficult to put into use.