On Monday 28 September, the German EU Council Presidency presented a proposal for “rules necessary to protect the EU budget in the event of breaches of the principles of the Rule of law in the Member States”.
This text (a regulation) thus establishes a “general cross-compliance regime for the protection of the EU budget”, with measures in the form of suspension of funds disbursement from the EU budget or the post-Covid-19 EU Economic Recovery Plan.
The proposal remains faithful to the European Council’s conclusions of 21 July by providing for a decision-making procedure involving qualified majority voting in the EU Council and an ‘emergency brake’, whereby the matter can be referred to the European Council, resulting in a decision delayed by up to 3 months. But the final decision would be taken by qualified majority in the EU Council.
The proposed text reads as follows: “If, exceptionally, the Member State concerned considers that there are serious breaches of the above principles (objectivity, non-discrimination), it may request the President of the European Council to refer the matter to the next European Council. In such exceptional circumstances, no decision concerning the measures should be taken until the European Council has discussed the matter. This process shall, as a rule, not take longer than 3 months after the Commission has submitted its proposal to the Council”.
The proposal will be presented on Tuesday to the EU Council’s working group on these matters and then on Wednesday to the Committee of Permanent Representatives of the Member States to the EU (Coreper).
An official close to the file told EUROPE on Monday that the proposal precisely implements the conclusions of the July European Council. “It is based on the Commission’s draft of 2018, which has been adapted in the light of the compromise reached between the European Heads of State and Government”. The proposal “gives legal form to this hard-won and delicate European compromise”. For the first time in the history of the EU, “there will be a mechanism that links the handling of European budget funds to the rule of law. This is an important step forward”, the source says.
The EU Council will have to approve the Presidency’s proposal by qualified majority, recalls one source.
Poland and Hungary have threatened not to adopt the decision (own resource) implementing the Economic Recovery Plan if they do not obtain a satisfactory text on the link between the budget and the Rule of law. The two countries also announced on Monday that they were going to set up a joint institute to assess the situation of the Rule of law in the Member States of the European Union.
The issue of the link between the budget and the Rule of law is part of the package under negotiation on the EU Multiannual Financial Framework (MFF) for 2021-2027 and the post-Covid-19 Economic Recovery Plan.
In response to a question from the press about the weakening of the original proposal, which provided for reverse qualified majority voting, a Commission spokesperson said on Monday that the institution is asking the EU Council to clarify its position and to transmit it to the Commission for further negotiations. “We need an effective mechanism to ensure that the Rule of law is protected by a mechanism in the EU budget”, they said.
Link to the draft regulation submitted by the German EU Council Presidency: https://bit.ly/3jbY194 (Original version in French by Lionel Changeur)