European agreement on the conditionality of the Rule of Law

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European agreement on the conditionality of the Rule of Law

The launch of the European recovery fund of 750,000 million euros is closer. The European Parliament and Germany reached an agreement on the conditionality of the rule of law that will be attached to European funds, one of the main obstacles in the negotiation.

Both sides have yet to agree this month on additional amounts for the EU’s multi-annual budget, of just over a trillion euros. Besides, they have to finalize the details of the Recovery and Resilience Facility, the main pillar of the recovery fund. However, aid from the fund is not expected to reach the capitals until the second half of 2021.

Under the agreement, the Commission may suspend the disbursement of European funds, for example in cases of corruption or conflict of interest. The Member States must submit their proposal to a vote within one month, with approval by a qualified majority.

The MEPs are thus able to establish the time limit they wanted so that the proposal for a community suspension does not gather dust on the Council table, as is now the case with the processes against Hungary and Poland for violating the rule of law.

However, the European Parliament did not achieve the approval by qualified majority. That is, Hungary and Poland would have to convince a majority of countries to block the Commission’s proposals. With the deal on the table, a minority will suffice to destroy a threat to their funds.

The MEPs managed to insert a list of the rule of law breaches that could trigger the process

Furthermore, in exceptional circumstances, a Member State may use an “emergency brake”, which will force EU leaders to discuss the infringement at a summit within three months of the Commission proposal. This is another concession for Warsaw and Budapest, which have threatened to veto the increase in the Community budget ceiling.

However, according to the compromise text, MEPs managed to broaden the spectrum of infractions that could trigger the process. One of their main demands includes endangering the independence of the judiciary.

The MEPs succeeded in expanding the scope of the mechanism the European Commission had initially proposed. Thus, it will include not only actions that directly affect the sound financial management of the EU budget but also those that run a severe risk of affecting Community funds.

Hungary reacts cautiously

It is still uncertain whether the agreement satisfies Budapest, or will it veto massive community borrowing. Judit Varga, Hungarian Justice Minister, wrote yesterday on Twitter that Hungary respects the Treaties and adheres to the historic July European Council agreement. She referred to the summit at which the recovery fund was agreed. Then the main characteristics of the conditionality of the Rule of Law were also established, which were less strict than those of yesterday’s pact.

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