The past week has been inundated with alarming news headlines about the European Union (EU) being trapped in a ‘hostage crisis’ by member states Hungary and Poland. The pair have blocked the adoption of the 2021-2027 €1.8 trillion budget proposal and COVID-19 recovery package due to a mechanism that makes disbursements of funds conditional on respecting rule of law and have refused to back down from their veto, which has left negotiations deadlocked and delayed €750 billion in crucial relief assistance amidst a second wave of coronavirus infections across the continent. However, despite mounting pressure to reach a compromise quickly, the EU must use this crisis as an opportunity to stand up against Warsaw and Budapest’s blackmail and defend its core principles or risk further undermining its power and significance.
The eastern European nations’ opposition to the conditionality, of course, is no surprise. Both Hungary and Poland have been at odds with the EU for many years now over a range of issues the bloc deems fundamental to its beliefs and identity. The countries have systematically undermined the independence of their federal judiciaries and media organizations, engaged in brazen cronyism, and used their authority to wage culture wars against LGBTQ+ and women’s rights and migration, all of which have only worsened amidst the COVID-19 pandemic.
Admittedly, the EU has been far too slow and weak in dealing with this creeping authoritarianism in the east. While both countries have been previously subjected to Article 7 proceedings—the mechanism that could strip such regimes of their voting rights in the bloc—EU leaders have failed to press forward with the process, leaving countries like Hungary and Poland with a seat at the table from which they can wreak havoc.
Now, the countries are exploiting this inaction by the EU, that too in the midst of a global crisis of massive proportions, by showing that if something does not go their way, they can bring the Union to a screeching halt, vetoing anything that requires unanimity in the Council. If this continues, in the absence of demonstrated political resolve to defend democracy and rule of law, rogue member states will continue taking advantage of the EU by flouting the bloc’s core values, while continuing to pocket its generous benefits.
Also read: COVID-19 vs Rule of Law: The Case of the European Union
So, what happens now? The onus of finding a way out of the current crisis will fall on Germany, given that it currently holds the rotating EU presidency. While there is a chance that some rewording of the rule of law clause leads to a budget compromise, giving in to Poland and Hungary by watering down rule of law protections will be a huge loss of face for the EU, as it will only prove that the states were successful in taking the Union hostage. Furthermore, it will encourage other members to use veto threats whenever they can in order to get the concessions they desire.
Luckily, experts claim that the EU has tools at its disposal that it can use to its benefit. If all other bloc members hold their ground, there will be no significant gains for the vetoers. The adoption of the conditionality rule (i.e. the rule of law regulation) requires only a qualified majority (which means 55% of member states, representing at least 65% of the EU population, vote in favour) in the European Council, and if the body approves it, the regulation will become law, regardless of Budapest and Warsaw’s opposition, making it a fait accompli.
In such a scenario, if the rule is passed and becomes an inescapable part of any future budgets, holding up the EU deal (and in turn, their own access to EU funds which they need desperately) for a prolonged period will not make sense anymore. Budapest and Warsaw know that they cannot prevent the conditionality rules from being adopted, but are showing what they will do if the law is ever triggered against them.
However, if the budget remains vetoed, the previous year’s allocations will continue until an agreement is reached, which will leave Hungary and Poland worse off financially. They will also face extreme criticism and isolation from other members for their actions.
In terms of the recovery package, the other 25 EU members can pursue it through ‘enhanced cooperation’, which allows for member states to adopt measures without the opposing nations. This would leave Hungary and Poland without access to tens of billions of euros in EU funds. If states chose this route, the EU will be able to demonstrate to opportunistic populist regimes that compromise on values such as rule of law and the rights of minorities is non-negotiable. Additionally, making enhanced cooperation a plausible policy option will also help Europe in the long-term, by making it possible for the bloc to move forward with meaningful reform without having to deal with deadlocks.
Unfortunately, however, these things will take time, which might dissuade the EU from taking bold action to discipline Budapest and Warsaw, given the resurgence of the COVID-19 infections in Europe. Though German Chancellor Angela Merkel, who is nearing the end of her fourth and final term in office, has described the rule of law as “the basis for the European project,” the urgency to address the budget impasse and keep the bloc together in light of the stresses caused by the pandemic and Brexit will most likely be her biggest priority at the upcoming EU Council summit on December 10. If that happens, and the parties are able to reach an agreement (which, according to them is possible), the EU must not lose sight of the underlying rule of law crisis it will continue to face and vow to work more consistently on reinforcing its principles to avoid such setbacks in the future.