EU court to rule on disputed funds, rule of law link

The EU’s top court will rule Wednesday on the legality of a mechanism opposed by Poland and Hungary that would allow Brussels to block funds from countries that contravene the rule of law.

Warsaw has long been at loggerheads with Brussels over judicial reforms, while Budapest has been asked to commit to anti-corruption reforms.

The advisor to the European Court of Justice rejected a challenge by the two countries in December, confirming that the so-called “conditionality” mechanism is in line with EU treaties.

In a sign of the importance of Wednesday’s decision, the ECJ plans to broadcast the announcement live for the first time.

Also Wednesday, Poland’s constitutional court will examine the mechanism from the Polish point of view.

The European Commission is in charge of activating the mechanism, and EU member states agreed to await the ECJ’s decision before acting, even though it came into force on January 1, 2021.

The European Parliament has been voicing impatience for months, even suing the commission in October over its inaction.

Responding to the pressure, the commission in November sent letters to Poland and Hungary reiterating its concern over the rule of law in the two former Soviet satellites.

The EU executive is concerned about Poland’s failure to recognise the primacy of European law, and its use of a mechanism for lifting the immunity of judges.

In Hungary’s case, the commission has raised concerns over public contracts, conflicts of interest and corruption in the spending of EU funds.

– ‘Basic values‘ –
If the ECJ gives its imprimatur, the mechanism should be implemented “immediately”, said Manfred Weber, parliamentary chief of the right-wing European People’s Party.

“We cannot… defend our basic principles when it comes to (Russian and Chinese leaders) Vladimir Putin and Xi Jinping and on the other hand not apply them at home,” Weber said.

“It’s not an East-West conflict or one between left and right, it’s a matter of the functioning of the EU and the protection of our most basic values and freedoms.”

But the commission must first publish implementation guidelines, and it may be weeks or even months before the mechanism swings into action.

Legislative elections set for April 3 in Hungary, where nationalist Prime Minister Viktor Orban will be up against a six-party opposition alliance, may complicate matters.

The new mechanism will apply to expenditures from the EU budget and post-Covid recovery plans — those of Poland and Hungary have yet to be approved by the European Commission.

The measure, sought by the European Commission, parliament, and several member states including the Netherlands as a means to protect EU finances, was hammered out in 2020.

Sophie Pornschlegel, a senior analyst at the European Policy Centre think tank, called it “the most effective instrument available to the European Union so far” to address the degradation of the rule of law by populist governments.

“But it is extremely specific,” she said. “It doesn’t recognise the systemic crisis that you have in these countries.”