(Bloomberg) -- As European Union leaders haggle over a coronavirus recovery plan, they have a headache in the east that just won’t go away.
Hungary’s parliament approved a resolution on Tuesday that calls on Prime Minister Viktor Orban to reject the EU’s proposal and its seven-year budget until it withdraws an investigation into democratic rule of law in the country.
It came two days after a presidential election in Poland laid bare how divided the country is over its relationship with Brussels, with nationalist incumbent Andrzej Duda winning by 51% to 49% against a pro-EU opponent.
“The EU’s rule-of-law procedures have turned into ideology-based political witch-hunts,” Hungary’s ruling Fidesz party said in the bill. “Ending these has become a necessary condition for assuming common debt and deciding together on a future for European nations.”
Poland and Hungary have long been at odds with the European mainstream, clashing over everything from the independence of courts and control of the media to climate change and immigration. But the latest developments come at an awkward time for the continent as it tries to corral the political support to address the economic fallout from the pandemic. Leaders are due to meet in Brussels on Friday.
The question is what the EU can do to respond. So far, the authorities haven’t managed to bring Poland or Hungary back into the fold. While it opened up legal proceedings over their power grab of democratic insitutions, any conclusion -- let alone potential sanctions -- are a long way off.
Veto Power
There are murmurings from fiscally conservative countries that there should be strings attached to how the EU’s central seven-year budget is distributed, as a way of encouraging countries to stick to the rule of law.
Officials say, though, they don’t expect any wholesale changes when the 27 leaders meet for their summit to thrash out the framework until 2027. In any case, a decision has to be agreed unanimously by all the government heads -- that includes the Polish prime minister, and his Hungarian ally.
“The EU can engage in further infringement actions and cut the money,” said Laurent Pech, professor of European law at Middlesex University in London. That would need political backing for sanctions, he said. “You would think that the EU will try to get ahead of the curve, but they are refusing to learn from their mistakes.”
Poland, in particular, is the paradigm of the European project, a country that defined the continent’s tumultuous 20th century history and then its efforts to heal the wounds in the 21st. Poles receive more money from the EU on a net basis than any of the 27 members.
Indeed, hundreds of billions of euros have transformed the economies of Poland and Hungary over the past 16 years. The Hungarian resolution is non-binding, but by driving a hard bargain on the spending plan, Orban may also try avert any reduction in funds earmarked for Hungary.
Brexit Specter
The behavior of Poland and Hungary presents an ongoing dilemma for the EU. While politicians from its European allies speak up against the unpicking of democratic institutions, they are fearful of pushing against the will of the electorate. The concern is that it might tempt another country to follow the U.K. out of the bloc.
Over the past five years, Polish measures introduced by the governing Law & Justice party and endorsed by Duda have already raised alarms in other European capitals. With its “Poland first” mantra, the government in Warsaw waged a campaign against independent judges, turned public media into its mouthpiece and railed against refugees and the gay community.
Duda’s victory means the government can now rely again on the support of a president handpicked by party chief Jaroslaw Kaczynski.
For some, Poland turning its back on the EU represents a wasted opportunity for a country that’s now the bloc’s fifth-biggest member.
“But this would require Law & Justice to end its rhetoric from past years -- that we want EU money, but not their EU s,” said Andrzej Rychard, a sociology professor at the Polish Academy of Science. “After Brexit, there is room for a more active Polish role in the EU.”
Rogue Status
There’s nothing to suggest that Poland or any other eastern member is planning to leave the EU. Law & Justice officials say they are “euro-realists” rather than “euroskeptics.”
But the support for Duda, albeit by a much tighter margin than polls predicted before the Covid-19 pandemic, was another warning to an increasingly fractured bloc during another pivotal test of its cohesion.
A politician who in 2018 described the EU as “an imaginary community from which we don’t gain much,” Duda, 48, based his campaign on Polish nationalism. He portrayed neighboring Germany as an enemy and lambasted foreign media as trying undermine the country’s conservative Catholic s.
That stood in contrast to his challenger, Rafal Trzaskowski, the mayor of Warsaw, who said his top foreign policy goal would be to restore close political ties with Paris and Berlin. Also 48, he addressed supporters surrounded by the blue-and-yellow EU flag as well as Polish ones.
Poland has now cemented its role as a European rogue alongside Hungary. As if to underscore the significance of Duda’s victory, Nigel Farage, one of the most prominent campaigners for Brexit in the U.K., expressed his support on Twitter. “Good to see a euroskeptic win in Poland,” he said.
©2020 Bloomberg L.P.
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