Current News

/

ArcaMax

EU will use budget tool against rule-of-law scofflaws 'in days'

Stephanie Bodoni and Annmarie Hordern, Bloomberg News on

Published in News & Features

The European Union as soon as this week may trigger a new tool that allows it to withhold budget payments to member states that fail to adhere to the bloc’s democratic standards.

The so-called conditionality mechanism came into force this year and hasn’t yet been used by the European Commission, the bloc’s executive arm. If utilized, the mechanism could freeze billions of euros in budgetary payments bound for member states.

“It’s a question of days or weeks, maximum,” EU Justice Commissioner Didier Reynders said in an interview with Bloomberg Television when asked when the bloc would use the tool. More broadly when it comes to Poland, he added, “For the moment we’re trying to build the most robust file possible to react.”

The EU has been hinting for a while it may soon trigger the conditionality mechanism, which withholds payments from the budget — as well as its 750 billion-euro ($870 billion) pandemic recovery package — to member states accused of democratic backsliding.

Poland and Hungary are challenging the conditionality mechanism in EU court.

But that mechanism is just one tool in the EU’s toolbox and the commission has already withheld approval of Poland’s and Hungary’s recovery plans, which is needed to unlock stimulus funds from the pandemic package.

If the two countries were to miss out on the stimulus funds — either by the commission not approving their plans or because of the conditionality mechanism — Poland would forfeit 36 billion euros ($41.7 billion) in recovery money and Hungary 7.2 billion euros ($8.3 billion).

 

Reynders is traveling to the different EU countries to discuss the commission’s rule-of-law strategy.

Polish Prime Minister Mateusz Morawiecki, who triggered the ruling by the Polish court, will speak to EU lawmakers in the European Parliament about the latest developments on Tuesday, together with Commission President Ursula von der Leyen. Reynders said the commission will be paying close attention to Morawiecki’s remarks.

“The president of the commission will be in the parliament with the prime minister of Poland to explain again that the pressure will come not only from the commission, from the parliament, from the Court of Justice, but more and more from the different member states and also from the civil society and the population in Poland,” Reynders said.

EU leaders will meet in Brussels Oct. 21-22 and while rule of law isn’t on the official agenda, some premiers have already indicated their intention to bring up the topic. The Netherlands’ caretaker prime minister, Mark Rutte, told his parliament last week that he’ll call on the commission to withhold the recovery money earmarked for Poland.

Poland’s nationalist government last week cemented into law a ruling that challenges the EU legal order by saying Polish law can override it. The primacy of EU law is written into its treaty.

Asked if Poland’s latest actions regarding its judiciary would hold up the commission’s approval of Warsaw’s recovery plan, Reynders said: “that will depend on the reaction of Poland.”

©2021 Bloomberg L.P. Visit bloomberg.com. Distributed by Tribune Content Agency, LLC.