Juncker seeks budget whip on unruly states

The executive, led by Luxembourg politician Jean-Claude Juncker, wants to be able to "suspend, reduce or restrict access to EU funding" in a proportionate manner to protect EU investments and European taxpayers' money.

"Only an independent judiciary that upholds the rule of law and legal certainty in all member states can ultimately guarantee that money from the EU budget is sufficiently protected," the commission said.

According to the proposal the procedure could be invoked by the commission when authorities managing EU money, "proper functioning of investigation and public prosecution of fraud or corruption relating to the budget" and judicial review are in danger in an EU country.

The move is seen as a way to sanction EU members, notably Poland and Hungary, two countries which the EU has investigated in recent years for curbing the judiciary's independence.

Poland is under the commission's Article 7 probe, with negotiations still ongoing between Brussels and Warsaw on how to come to a political and legal compromise.

However, commission president Jean-Claude Juncker on Wednesday insisted that the proposed measure is not against any member state.

"It's not a Polish question, it is a general question," he told reporters.

"We do not perceive today's proposals as confrontational towards Poland," the Polish EU affairs minister Konrad Szymanski also said after the commission unveiled its proposal.

He added that "the principle of transparency [in spending and allocation of funds] is close to our hearts [and that] there is no controversy here; even more so, given that the controversy around article 7 and Polish judicial reforms might be solved soon."

The Polish minister however expressed concern, noting that "every legal provision needs to be clearly defined, there can be no space for arbitrariness."

Hungary's government spokesman Zoltan Kovacs was more assertive, referring to the rule of law conditionality in tweet: "There are EU Treaties in force, and we work on the basis of these. No other assumptions exist in a legal sense."

On the other hand, liberal MEP Guy Verhofstadt, a fierce critic of Hungary's prime minister Viktor Orban, welcomed the commission's proposal.

"If a government of a member state of the EU doesn't want to apply and respect European values, it doesn't need European money," he told fellow MEPs.

"European money should be used lift up national economies, to lift up citizens and not to be granted to the family of Orban or to finance one of other football in his constituency," he added.

Commission in charge

According to the proposal, the commission wants to remain in control of the decision.

Other rule of law probes, such as the Article 7 procedure, requires the council, the collection of member states to agree to sanctions, before the EU country breaking EU rules could be punished.

EU member states have proven to be reluctant to sanction one another, undermining any effort by the commission to rein in countries challenging EU values.

Under the new plans, the commission could trigger the procedure after which the EU country concerned would have one month to explain itself.

The commission then decides on whether to suspend funds, with only the majority of EU member states able to overturn the decision. That broad commission power could upset member states, making a deal difficult.

The measures would stay until the commission decides the deficiencies in the judiciary no longer exist.

"It is in the interests of European taxpayers … to ensure that those judiciaries control how those funds are spent," budget commissioner Guenther Oettinger said on Wednesday.

The EU budget requires the unanimous decision of member states, including those which might feel targeted by the new measures.

The commission has so far been mute on how it wants to convince member states that have challenged EU rules on the judiciary to agree to the new procedure.

One commission official said an agreement on the rule of law conditionality could boost spending from net payers if they felt their money was more secure and that a larger EU budget was in the interest of eastern European countries.