EU Budget Negotiations

Delo writes about the solution to the budgetary impasse that the German Presidency of the Council of the European Union recently proposed. After intensive negotiations at the highest political level, an end to the Hungarian-Polish blockade of the EU’s multiannual budget and Recovery Fund seems to be within reach. The compromise between the EU Council and MEPs, on making payments conditional on the Rule of Law, will remain intact. However, its implementation in practice will be delayed, as the proposal says that the Court of Justice of the European Union must first prove the legal basis for the Rule of Law mechanism. This solution has been prepared with a special statement to take Hungarian and Polish reservations into account. The proposal, drafted by German Chancellor Angela Merkel, ensures that regulation on the general regime of conditionality will apply to the EU budget and the Recovery Fund. Hungary and Poland have been assured that the application of the deal will acknowledge the national identities of the Member States in their basic political and constitutional structures. The proposal states that the “application of the conditionality mechanism under the Regulation will be objective, fair, impartial and fact-based, ensuring due process, non discrimination and equal treatment of Member States." 

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Helsingin Sanomat comments on the Finnish perspective on the negotiations and the proposed compromise. According to Sanna Marin, Prime Minister of Finland, the Rule of Law mechanism should be introduced to the distribution of EU money as soon as possible. “Personally, I would start by talking about months and not years,” said Marin on Thursday when she arrived in Brussels for the EU summit. Under the current compromise, the Rule of Law mechanism is not expected to enter into force for another two years, pending assessment at the European Court of Justice. The timetable is of great importance for Hungary, which has opposed the mechanism, since the next elections in the country are due to take place in 2022. For Finland, the previous agreement with the European Parliament on the mechanism will not be changed, explained Marin. Arriving at the summit, German Chancellor Angela Merkel said she had worked very intensively in recent days for a compromise. “It would also be an important demonstration of the EU’s ability to act if we were to achieve this goal,” Merkel said. In his statement upon arrival in Brussels, Hungarian Prime Minister Viktor Orbán said that “today, we are fighting for the unity of the continent and the victory of common sense.”

Trouw reports on the doubts expressed by Dutch Prime Minister Mark Rutte on the German proposal when he arrived in Brussels for the EU summit. Rutte wants additional guarantees before he agrees to a compromise on the Rule of Law conditions on behalf of the Netherlands. This Thursday, Hungary and Poland indicated that the compromise in question is enough for them to drop their EU budget vetoes. Rutte, on the other hand, is less convinced. “I am neither negative nor positive, but neutral,” said the Prime Minister upon arriving in Brussels for the two-day European end-of-year summit. Unanimous agreement on the compromise is essential to lift the blockade of the EU multiannual budget (2021-2027) and the Recovery Fund. From a legal point of view, the additional statement in the compromise does not appear to detract from the Rule of Law mechanism adopted by a majority of countries last month. However, the system is purely intended to guarantee the responsible use of EU funds. There are other procedures for upholding elementary Rule of Law principles such as the independence of the judicial system and freedom of the press. Meanwhile, Hungary and Poland have presented the compromise as a personal victory. "We have successfully neutralized our enemies," said Hungarian Prime Minister Viktor Orbán on Facebook. "I now have one task, to enforce common sense." 

Ta Nea writes about the importance of striking a deal in the budget and Recovery Fund negotiations for Greece. Several countries, especially those with high debt ratios, are by and large supporting recovery via EU funds, with Greece expecting more than €5 billion from the Recovery Fund in 2021 alone. The Greek government has already sent the draft for the country's investment and reform plan to Brussels, claiming a total of 32 billion euros. These resources will help countries receiving large grants from the Fund to borrow less from the financial markets and, as a result, have comparatively lower debt burdens. Paolo Gentiloni, European Commissioner for Economy, recently stated that the EU will proceed without Hungary and Poland, even if they continue to try to veto. The majority of economic analysts appear optimistic about the outcome of the dispute, estimating that it will be resolved in one way or another.