EU breaks stalemate on €1.8tn seven-year budget and recovery fund
The EU’s unprecedented €1.8tn (£1.6tn) seven-year budget and coronavirus recovery fund has been unblocked after Hungary and Poland lifted their objections to a link between payments and maintaining the rule of law.
At a summit in Brussels, Hungary’s prime minister, Viktor Orbán, and his Polish counterpart, Mateusz Morawiecki, backed a compromise tabled by Berlin after months of tensions and destabilising rows.
“Now we can start with the implementation and build back our economies,” the president of the European council, Charles Michel, tweeted. “Our landmark recovery package will drive forward our green and digital transitions”.
Hungary and Poland had refused to allow the disbursement of the budget – known as the multiannual financial framework – or the pandemic recovery fund, known as Next Generation EU.
They had claimed that a rule-oflaw condition on the payment of funds, designed to be a block on corruption, was legally vague and could be used to punish Warsaw and Budapest over political differences ranging from attitudes to migration and the treatment of
LGBTQI+ communities.
The two leaders finally gave their backing to the bloc’s plans on the basis of a text reassuring them that conditions would only relate to future spending.
The European court of justice will also rule on the legality of the tool, if it is challenged. The EU’s supreme court would provide judgment before the European commission published guidelines on how to trigger the mechanism, delaying the implementation of the clause beyond 2022, when Orbán is facing national elections.
The two governments had been warned that the 25 other member states might go it alone in agreeing a recovery rescue fund if they continued to stand in the way of it being paid out.
Countries such as the Netherlands and Sweden had been vocal in insisting on maintaining the condition on the basis that they could no longer turn a blind eye to poor governance.
Both Poland and Hungary have been accused of undermining the independence of their judiciaries.
The European parliament, which negotiated the draft rule-of-law mechanism with the German presidency of the EU, a position it has held for the last six months, backed the compromise sealed at the summit.
Rasmus Andresen, one of the MEPs who had negotiated the mechanics of the rule-of-law condition, said Orbán had failed.
He said: “Crucially, the legislative text on the rule-of-law mechanism remains unchanged. Thanks to pressure from the European parliament, the legal text remains unchanged. Viktor Orban has failed.
“The political declaration of the heads of state and government has no meaning for the European parliament. It remains a non-binding political declaration. A unilateral political declaration of intent must not and cannot prevent legislation.
“It will be crucial that commission president [Ursula] von der Leyen remains firm and is not guided by lazy and non-binding declarations of the member states.”