European Budget and Recovery

Corriere della Sera writes on the  package proposed by the German Presidency of the Council of the European Union as well as its recent blockage. This package contains the multiannual budget of the Union (2021-2027), the rule of law mechanism, the Recovery Fund (Next Generation EU), and the agreement on the EU’s Own Resources which allows the European Commission to borrow money on the financial market. At the meeting of the Permanent Representatives Committee to the EU, the ambassadors of Poland and Hungary voted against it. Hungarian Prime Minister Viktor Orbán does not want to run the risk of being denied EU funds as a sanction for rule of law violations before Hungarian elections in 2022. Recently,  two new laws were introduced by Budapest, one discriminating against gender minorities and one electoral law preventing the opposition from uniting against Orbán’s party Fidesz. Hungary and Poland have no substantive objections, being important beneficiaries of both the budget and the Recovery Fund. In Budapest in particular, which in 2018 received 6.3 billion euros from cohesion funds, another 7.5 billion euros from the Next Generation EU are allocated. However, it is the rule of law mechanism with which Warsaw and Budapest have a problem. Moreover, according to the Hungarian Prime Minister, it is not just a question of money. The rule of law mechanism would make it possible to blackmail a country for ideological reasons and “would transform the European Union into a new Soviet Union.” 

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El País reports on what will happen after the veto of Hungary and Poland. On Monday, Hungary and Poland blocked the new EU Budget, including the Recovery Fund. The latest obstructions to the EU budget have forestalled European aid intended to alleviate the economic crisis caused by COVID-19. A diplomatic source in the Council said that “we are heading towards an inevitable clash.” These subsidies, allocating up to 750 billion euros, are key for Spain and Italy. The mechanism of the rule of law can be approved by a simple qualified majority, and thus the German Presidency can rest easy knowing that both Poland and Hungary are unable to derail it. However, the decision of the budget, Own Resources, and the Recovery Fund will require unanimity. “It is inevitable that a delay will occur and that the conclusion of the entire process will last until early 2021,” said the source of the Council. The European Commission is considering to appease Budapest with some type of declarations signed at the highest level that guarantees a proportionate, balanced and equitable use of the mechanism of the rule of law, which would only allow the suspension of funds in the event that the undemocratic drift of a country flagrantly endanger the financial interests of the Union. 

Wyborcza writes about what the EU should be doing in regards to its approach to Hungary and Poland. Despite public assurances from Polish PM Mateusz Morawiecki, economic success seems a distant dream for his country and many other Member States, such as Spain and Italy. The development of events should not surprise anyone, however. Despite protests in Brussels against the takeover of the Constitutional Tribunal by the PiS government in 2016, the Polish authorities have continued to cause controversy. The Minister of Justice, Zbigniew Ziobro, sent offensive letters to EU Commissioners and has accelerated the pace of judicial takeovers. Jarosław Kaczyński, President of PiS, spoke about the need to rebuild the community so that no Commissioner would dare dictate the Polish authorities on matters relative to the rule of law. Although Von der Leyen and her predecessor Jean-Claude Juncker sent negotiators to Poland, it has not respected subsequent compromises. For the PiS President and the Minister of Justice, readiness to make concessions is a sign of weakness. In the case of Hungary, the Union has been even less proactive. The discussion within the European People's Party on whether to throw out Fidesz, the populist party of Prime Minister Viktor Orbán, has already lasted two years. 

De Volkskrant writes about the lack of ground Dutch PM Mark Rutte is willing to give in this budgetary dispute. The Netherlands is intensifying the fight in the European Union for linking budget funds to rule of law mechanisms. Mark Rutte said that there is no compromise to be made on such instruments. “The fastest solution would be to renegotiate and reach a compromise, but that seems impossible to me,” said Rutte. The Prime Minister has given thought to a Recovery Fund and a Multiannual Financial Framework without Poland and Hungary, but emphasised that it is incumbent,  not on the Member States, but on the German Presidency, the European Parliament and the Commission to find an agreement. If not, said Rutte, then the Council will have to find a solution. Furthermore, Rutte said that he “spent three hours trying to find a compromise to get the term ‘gender equality’ in a text about Africa. That term was not allowed, because it was contrary to some principle in Hungary and Poland. It is that serious now.”