Thursday

28th Mar 2024

EU leaders unblock budget in deal with Hungary and Poland

  • French president Emmanuel Macron (r), German chancellor Angela Merkel, European Council president Charles Michel, Hungarian PM Viktor Orban, Poland's premier Mateusz Morawiecki finalise the rule of law compromise on Thursday (Photo: Council of the European Union)

EU leaders, on Thursday (9 December), unblocked the €1.8 trillion budget and Covid-19 recovery fund after they reached a compromise with Hungary and Poland on ways to link EU funds to the respect for rule of law.

The agreement came after intense negotiations over the past few weeks, with the aim of lifting the veto of the two countries, who had argued that the new mechanism aimed at protecting the rule of law in the EU - and already agreed by the European Parliament and 25 member states - could be used to wage political wars against them.

Read and decide

Join EUobserver today

Get the EU news that really matters

Instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

The hold-up threatened to derail the next seven-year budget and the recovery fund, aimed at mitigating the economic consequences of the pandemic.

EU leaders meeting in Brussels agreed in the conclusions of the summit that the rule-of-law conditionality will only be used for the seven-year budget starting next year and the recovery fund, not for payments made from the current budget.

The use of the new tool will likely be delayed as leaders also agreed that any sanctions process could only be triggered by the EU Commission once the European Court of Justice (ECJ) rules on the new mechanism.

And the ECJ ruling is likely to come into play, when the new model is challenged in court by Hungary and Poland.

The compromise needed the approval of countries that strongly supported the rule of law conditionality, such as the Netherlands.

Dutch prime minister Mark Rutte, earlier on Thursday, asked for clarifications on whether the compromise would change the scope of issues that can come under scrutiny and if rule-of-law breaches could be punished retroactively as of January.

During the first hours of the summit, consultations went on with the council's legal services, and an EU source said eventually "Rutte got all clarifications".

MEPs stressed that the leaders' political declarations would not change the legal text of the conditionality which, for the first time in the EU's history, allows the suspension of EU funds if breaches of the rule of law linked to those subsidies occur.

"The European Council conclusions are a political statement, they are not legally binding, The text on the table is [binding]", the German leader of the centre-right group in the EU parliament, Manfred Weber, said.

"We expect the commission to fully implement the mechanism from the first day from when it becomes legally binding," he told reporters on Thursday, adding that the parliament plans to adopt its own political statement next week.

"This is an important win for the rule of law and the EU. The Parliament or the Council did not give in to threats. The agreement on the rule-of-law conditionality will not be reopened, and the regulation shall apply from 1.1.2021," Finnish centre-right MEP Pari Sarvamaa, who was the top parliament negotiator on the issue, also tweeted.

Better equipped

The EU has struggled for years to rein in countries like Hungary and Poland that backslide on democratic principles, and the new rule-of-law mechanism - originally proposed in 2018 - is seen as a key step in making the bloc better equipped to handle wayward members.

The Warsaw and Budapest governments, however, had been keen to avoid any link between EU funds and core values.

Hungary's prime minister Viktor Orbán in a Facebook post on Thursday evening said that "common sense has won".

"We protected the European constitution, we averted the danger of using budgetary measures to force Hungarians into taking decisions we don't want, and we protected the Hungarians' money," he added.

The new rule-of-law conditionality will likely not be effective for at least several months, even years, as the EU's top court weighs in, and the Commission comes up with guidelines on how to use the conditionality, which was also part of the compromise.

Meanwhile, Hungary and Poland made it clear in the last weeks they could make it politically painful for other member states if the rule-of-law tool was applied in a way that they disliked.

Deal reached on linking EU funds to rule of law

The deal means MEPs and the German EU presidency unblocked a major political hurdle to agreeing on the €1.8 trillion long-term EU budget and coronavirus recovery package.

EU leaders agree corona recovery after epic summit

After gruelling five-day talks, EU leaders agreed on €390bn in grants and €360bn in low-interest loans to hardest-hit member states - after much opposition from the Dutch-led 'frugal' bloc of countries.

Opinion

Why UK-EU defence and security deal may be difficult

Rather than assuming a pro-European Labour government in London will automatically open doors in Brussels, the Labour party needs to consider what it may be able to offer to incentivise EU leaders to factor the UK into their defence thinking.

Latest News

  1. Kenyan traders react angrily to proposed EU clothes ban
  2. Lawyer suing Frontex takes aim at 'antagonistic' judges
  3. Orban's Fidesz faces low-polling jitters ahead of EU election
  4. German bank freezes account of Jewish peace group
  5. EU Modernisation Fund: an open door for fossil gas in Romania
  6. 'Swiftly dial back' interest rates, ECB told
  7. Moscow's terror attack, security and Gaza
  8. Why UK-EU defence and security deal may be difficult

Stakeholders' Highlights

  1. Nordic Council of MinistersJoin the Nordic Food Systems Takeover at COP28
  2. Nordic Council of MinistersHow women and men are affected differently by climate policy
  3. Nordic Council of MinistersArtist Jessie Kleemann at Nordic pavilion during UN climate summit COP28
  4. Nordic Council of MinistersCOP28: Gathering Nordic and global experts to put food and health on the agenda
  5. Friedrich Naumann FoundationPoems of Liberty – Call for Submission “Human Rights in Inhume War”: 250€ honorary fee for selected poems
  6. World BankWorld Bank report: How to create a future where the rewards of technology benefit all levels of society?

Stakeholders' Highlights

  1. Georgia Ministry of Foreign AffairsThis autumn Europalia arts festival is all about GEORGIA!
  2. UNOPSFostering health system resilience in fragile and conflict-affected countries
  3. European Citizen's InitiativeThe European Commission launches the ‘ImagineEU’ competition for secondary school students in the EU.
  4. Nordic Council of MinistersThe Nordic Region is stepping up its efforts to reduce food waste
  5. UNOPSUNOPS begins works under EU-funded project to repair schools in Ukraine
  6. Georgia Ministry of Foreign AffairsGeorgia effectively prevents sanctions evasion against Russia – confirm EU, UK, USA

Join EUobserver

EU news that matters

Join us