Rule-of-Law Report Worsens Spat Over EU’s Recovery Fund
EU Virus Fund in Trouble as Commission Censures Hungary, Poland
(Bloomberg) -- The European Commission released a critical report about the state of democracy in Hungary and Poland, adding fuel to a showdown that threatens to delay a 1.8 trillion-euro ($2.1 trillion) economic recovery package.
“Prosecution of high-level corruption” in Hungary “remains very limited and there appears to be a consistent lack of determined action to start criminal investigations and prosecute corruption cases involving high-level officials,” the European Union’s executive arm said in its first-ever annual rule-of-law report, which assesses the bloc’s 27 member-states.
The assessment could increase pressure to tie disbursements of EU funds with adherence to rule-of-law standards, under a proposal that Hungary and Poland currently reject.
While the bloc’s leaders had agreed in principle in July that a mechanism to protect EU funds from fraud in cases where institutions are weak should be created, they left the details of how this mechanism would work unresolved. A German proposal was summarily turned down by Budapest and Warsaw, while richer nations such as Finland and the Netherlands argued that it doesn’t go far enough.
Blockades Increasing
“We observe with concern that the number of different blockades in the budget negotiations seems to be increasing rather than decreasing,” said a spokesman for the German presidency of the EU. “A delay of the EU budget and the recovery fund is becoming increasingly likely.”
The commission isn’t concerned about its findings affecting the timing of EU budget negotiations, Vera Jourova, commission vice-president for transparency and values, told journalists at a press briefing about the EU document.
The EU’s report can’t also be used to assess whether member states meet certain conditions in the budget tied to the rule of law, but there “will have to be a new, very thorough assessment which will look into the conditions for protecting EU money in the respective member states,” Jourova said.
A weighted majority of member states is needed for the rule-of-law conditionality for EU funds to be approved. Separately, allowing the commission to issue 750 billion euros in debt on behalf of the bloc to fund the recovery package requires unanimity, which so far Hungary refuses to grant.
“We are dealing with a very polarized debate,” the German presidency spokesman said after a discussion of the proposal among EU diplomats on Tuesday. “There is dissatisfaction and criticism at both ends of the spectrum.”
At a meeting of EU government envoys on Wednesday, the German proposal, under which a qualified majority of member states would need to approve any decision to stop fund disbursements to countries over rule-of-law breaches, got the required backing of member states. Hungary, Poland, Sweden, Finland, Denmark, the Netherlands and Belgium still opposed it, while Germany will also need the approval of the EU Parliament, with which negotiations are just starting.
Too Lenient?
Richer nations see the plan as too lenient, and have said they won’t agree to bankroll a joint aid pot without iron-clad guarantees that funds won’t be misappropriated.
The commission’s report on Wednesday may exacerbate their reservations, saying that:
- “Concerns that high-level corruption cases are not pursued systematically are also present in” the Czech Republic.
- “In Poland, the double role where the Minister of Justice is also the Prosecutor General has raised particular concerns, as it increases the vulnerability to political influence.”
- Poland has rule of law deficiencies in all four dimensions gaged. Controversial judicial reforms initiated in 2015 led to increased political influence over courts, government plans to change the media landscape can influence their pluralism, while actions against, NGOs and LGBT groups, including smear campaigns raise further concerns.
- In Hungary, “significant amounts of state advertising channeled to pro-government outlets have opened the door for the government to exert indirect political influence over the media.”
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