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38 I Central Europe bne December 2020
Poland and Hungary block EU budget over rule of law link
Wojciech Kosc in Warsaw
Poland and Hungary blocked the adoption of the European Union’s budget for 2021-2027 and the coronavirus (COVID-19) recovery fund on November 16 over
a provision linking the disbursement of the funds to respecting the rule of law.
Warsaw and Budapest have long been at odds with the EU and some of the bloc’s governments over policies undermining the independence of the judiciary and attacking media, minorities and NGOs.
They also are subject to official EU investigations over some of those policies. Both countries deny any wrongdoing and say that the EU’s attempt to link payouts from the budget and the recovery fund to rule of law is an unfounded intervention in their internal affairs.
The €1.8 trillion EU budget and the €750mn recovery fund must be adopted unanimously by all member states in
a complicated process involving a positive vote in the European Parliament and unanimous backing in the European Council, a gathering of member states’ leaders.
The recovery fund – specifically the so-called Own Resources Decision, which lays legal framework for the
of circumventing the defiant duo – which, some experts claim, is technically possible although problematic from
a political point of view.
The EU could also enter next year with only a provisional budget that would be severely diminished in comparison to the proposal just blocked by Warsaw and Budapest.
“Warsaw and Budapest could face losing billions of euros in EU funding over the next seven years”
EU to borrow money that will feed
the fund – also must go through the Council in another unanimous decision. Member states’ parliaments will then have to ratify it.
The unanimity required during the process gives Poland and Hungary some leverage in negotiations but is also risky in case Brussels finds a way
In either case, Warsaw and Budapest could face losing billions of euros
in EU funding over the next seven years, weakening growth, stalling infrastructural developments or – especially in Poland case – hindering the transition to a low-carbon economy.
That could, in turn, weaken the populist governments in both countries, where