How Europe Plans to Compel Its Nations to Obey Democratic Rules

Countries such as Poland and Hungary that are at risk of losing out on billions of euros in European Union funds due to democratic backsliding just got their first indication of how the new rules will be applied.

The European Commission, the EU’s executive arm, sent a draft of its guidelines to member states this week that outlines how it plans to apply the so-called rule-of-law mechanism, which gives it the power to protect the bloc’s budget from democratic breaches.

Countries that run afoul of the new regulation stand to forfeit disbursements from the EU’s 1.2 trillion-euro ($1.4 trillion) joint budget and a stimulus plan of up to 800 billion euros.

Vera Jourova, an EU vice president in charge of values, said in an interview with Bloomberg last month that the commission may trigger the mechanism later this year.

The draft guidelines, obtained by Bloomberg, provide examples of rule-of-law breaches that may be punishable by the new regulation, including by:

  • “Endangering the independence of the judiciary,” according to the draft, which is subject to consultation
  • “Failing to prevent, correct or sanction arbitrary or unlawful decisions by public authorities”
  • “Limiting the availability and effectiveness of legal remedies”
  • “Non-effective or untimely cooperation” with the bloc’s anti-fraud organizations
  • The draft also specifically highlights the conduct of authorities in charge of land registries and agricultural interests

Qualified Majority

It will be the responsibility of the Commission to identify possible rule-of-law breaches and to investigate them, according to the guidelines. If a breach is determined to have a direct link to the financial interests of the EU then, the commission will notify the country, initiating the procedure.

The member state has a month to respond, at which point the commission can propose punitive action to the EU’s 27 member states, which would have to agree on the assessment by qualified majority.

The mechanism gives the commission the power to withhold payments to member states for the first time, a worrying development for Hungarian Prime Minister Viktor Orban and his Polish counterpart Mateusz Morawiecki, who have flouted EU demands to roll back their power consolidation. Both countries are already being investigated for democratic backsliding.

Orban’s government could miss out on as much as 7.2 billion euros of grants from the EU recovery plan, and Jourova’s time line means the process could be well underway before Hungarian elections early next year. Poland, where the next general election is scheduled for 2023, could lose out on as much as 23.9 billion euros of grants.

©2021 Bloomberg L.P.

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