The Big EU Rule-of-Law Battle Is Still to Come After Rescue Deal

(Bloomberg) -- European Union leaders for the first time introduced language linking funding to upholding the rule-of-law, but its vague wording allowed both rogue members and rights champions to claim victory and pushed the debate to later this year.

European Commission President Ursula von der Leyen hailed the text adopted after four days of non-stop budget talks for providing a “clear link” between financing and adherence to the EU’s democratic standards. On the other side, Hungarian Prime Minister Viktor Orban said he’d “fought off” just such an attempt.

The upshot is that the fight over whether the EU will have a functioning tool to rein in countries flouting its democratic values will likely continue into autumn, when the actual regulation will be hammered out, according to Daniel Hegedus, a Budapest-based fellow at the German Marshall Fund. Hungary and Poland, both under formal EU probes for undermining the rule-of-law, could lose billions of euros if tough rules are enacted.

“Everyone is claiming victory, but the real battle is still to come,” Hegedus said. “The question is whether the EU will have a mechanism that bites or one that continues to be prey to political wheeling and dealing, in which case the rules will be toothless.”

Parsing Words

At stake is whether the EU can defend its values against the type of nationalist drives undertaken by governments -- like in Hungary and Poland -- that have disavowed liberal democracy and have pursued unprecedented consolidations of power. Steps have included extending politicians’ influence over the courts, media, education and culture.

The text adopted this week calls for a “regime of conditionality” to be introduced to protect EU funds. The European Commission, the EU’s executive, will formulate the rule, which will need a qualified majority among EU governments to become law.

At the same time, the conclusion adds that the European Council, comprised by the heads of governments, “will revert rapidly to the matter” -- which some, including Polish Prime Minister Mateusz Morawiecki, seized on to claim it affords any country a veto over the type of rule to be adopted.

“The European Council - it is clearly written there - means unanimity. Without the consent of Hungary, without the consent of Poland, without the consent of the Visegrad Group, nothing will happen here,” Morawiecki said after the summit. “Poland won’t lose a euro cent from what we earmarked for expansion.”

Orban, for his part, said attempts to link EU funding to rule-of-law conditions were “successfully rejected.” Backers of the provision disagreed.

“I understand that Mr. Orban is selling this as a victory, and that’s his role,” Luxembourg Prime Minister Xavier Bettel said. “But it’s no victory because we finally have values attached to the distribution of funds and money, which for us is a very important new step.”

Debate Continues

The contrasting views suggested that the matter will be addressed later this year.

“This is the starting basis,” said European Commission Spokesman Eric Mamer. “We will reflect now on the steps forward in the coming days.”

The most important element to watch, according to Hegedus, is whether the commission sticks to an earlier draft version of a proposed mechanism that would require a reverse qualified majority to approve breaches. If it does, that would mean a qualified majority would be need to block -- rather than approve -- a proposal to cut funding.

“We know the biggest fight is still ahead of us,” Hungarian Justice Minister Judit Varga said in an interview with the Magyar Nemzet newspaper published Wednesday. “We’re prepared for it.”

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