EU countries that do not respect the rule of law could lose access to EU funds, according to a provisional agreement reached on Thursday 5 November between the European Parliament, the EU Council and the European Commission.
This agreement between EU institutions on the regulation which introduces for the first time budgetary conditionality on the rule of law should make it easier to reach a final compromise on Monday 9 November on the EU’s Multiannual Financial Framework (MFF) for 2021-2027 and the Economic Recovery Plan (see EUROPE 12594/2).
The German Ambassador to the EU, Michael Clauß, said, “This is an important milestone in our efforts to finalise the next long-term EU budget and the recovery package”. The new conditionality mechanism will strengthen the protection of the EU budget when violations of the principles of the rule of law lead to the misuse of EU funds, he went on to specify. “It is time now to find agreement on the rest of the package as well. We have a historic €1.8 trillion financial package on the table. With the second wave of the pandemic hitting Member States hard, there is no time to lose”, he warned.
“It’s a beautiful day”, in Brussels, noted Petri Sarvamaa (EPP, Finland), co-rapporteur to the European Parliament on this issue, adding that the day is even more beautiful thanks to “the historic agreement that links the use of EU funds with respect for the rule of law in EU Member States”.
He welcomed in particular the preventive nature of the mechanism in case of risk to the EU budget. “There is a clear majority of Member States who want to end one phase in European history and start a new one”, Mr Sarvamaa stressed. The hardest fight won against the Council of the EU was to obtain an article in the regulation listing what constitutes a violation of the rule of law and what could endanger the independence of the judiciary, Mr Sarvamaa also noted.
The other co-rapporteur, Eider Gardiazabal Rubial (S&D, Spain), also spoke of a “historic” day thanks to the agreement reached in 3 weeks, which ensures that the rule of law is taken into account “in the context of all EU values laid down in the Treaties, including fundamental rights”.
Emergency brake retained. Mr Sarvamaa stressed that the German Presidency of the Council had succeeded in retaining an “emergency break” system, allowing a Member State to initiate a discussion in the European Council on the measures proposed by the Commission. “But we wanted to make sure that nothing would prevent the Council from adopting a decision and that the deadlines could not be extended indefinitely”, the rapporteur said.
Operation of the mechanism. MEPs say they have succeeded in reducing the time available to the EU institutions to adopt measures against a Member State, if risks of violation of the rule of law are identified, to a maximum of 7 to 9 months (instead of 12 to 13 months as originally requested by the EU Council).
Once the Commission has made a proposal for sanctions, it must be approved by the EU Council of Ministers by qualified majority. This means that at least 15 of the 27 Member States, representing at least 65% of the EU population, must accept the proposed sanctions.
Before the vote in the Council of the EU, the Member State in question will be able to comment on the Commission’s proposal and defend itself.
The Council of the EU will have 1 month to adopt the proposed measures, or 3 months if the ‘emergency brake’ is used. The Commission will use its right to convene the Council of the EU to ensure that the deadline is met. Possible sanctions could take the form of a suspension of commitment or payment appropriations from the EU budget or even loans under the Economic Recovery Plan, among other things.
Broader concept of breach of the rule of law. MEPs succeeded in ensuring that the new legislation does not only apply when EU funds are misused, such as in cases of corruption or fraud. It will also apply to systemic aspects related to the fundamental values of the EU that all Member States must respect, such as freedom, democracy, equality and respect for human rights, including minority rights. Parliament’s negotiators also insisted that tax fraud and tax evasion be covered by the mechanism, including both individual cases and generalised and recurrent situations. In addition, they succeeded in obtaining a specific article that clarifies the possible scope of breaches by listing examples of cases, such as threats to the independence of the judiciary, failure to correct arbitrary or unlawful decisions and limitation of legal remedies.
Prevention. Elected Members have succeeded in getting an important preventive aspect of the mechanism endorsed: it can be triggered if a breach directly affects the budget, but also when there is a serious risk that it will do so. The objective is to avoid situations where EU funds could finance actions that are in conflict with EU values.
Protect the ultimate beneficiaries. To ensure that final beneficiaries who depend on EU aid – such as students, farmers or NGOs – are penalised because of the actions of their governments, MEPs secured provisions allowing such beneficiaries to lodge a complaint with the Commission via an online platform that will help them to ensure that they receive the amounts due. The Commission will also have the possibility to make a financial correction by reducing the next instalment of EU aid that was due to flow to the country concerned.
Next steps. The agreed compromise must now be formally adopted by Parliament and the Council of the EU. The Parliament Committees on Budgets and Budgetary Control could approve the compromise text next week.
The reactions of MEPs are generally positive, although Parliament initially proposed a stronger mechanism, including a so-called ‘reverse’ qualified majority vote.
Dacian Cioloş, the president of the Renew Europe group, said it is “unacceptable” that some EU countries continue to use European taxpayers’ money to undermine the fundamental rights of EU citizens. “The European Union is not a cash machine, it is a union of values and fundamental rights, which must be defended. Europe is first and foremost a union of values. This rule of law mechanism will make it clear”, he said.
Terry Reintke (Greens/EFA, Germany) felt that the mechanism agreed is not as strong as Parliament wanted. “This agreement is not perfect, but it lays the basis for action against Member States that attack democracy and the rule of law”.
Daniel Freund (Greens/EFA, Germany) noted that the compromise “is much stronger than what the German Council Presidency presented a few weeks ago”. Now Member States must prove that this sanction mechanism can be applied, he insisted, referring to current developments in Poland and Hungary. (Original version in French by Lionel Changeur)