EU Commission develops Corona reconstruction funds, excluding Poland and Hungary from direct participation
Europe's Recovery Fund Faces Impasse as Poland and Hungary Oppose Rule-of-Law Conditions
Brussels - The European Commission is honing proposals to implement the €750 billion Next Generation EU (NGEU) recovery fund without the participation of Poland and Hungary, according to reports in the "Frankfurter Allgemeine Zeitung". The two nations have been obstructing the funds' distribution due to their objection to linking aid to adherence to the rule of law.
The EU's recovery fund, intended to help member states recover from the economic consequences of the coronavirus pandemic, might be excluded from Poland and Hungary "de jure" or "de facto," according to Commission circles. Various solutions are under consideration, with the preferred model mirroring the EU unemployment benefit, 'Sure', agreed upon by the states at the onset of the coronavirus crisis. Under this model, the fund would be secured by voluntary guarantees from the member states rather than through the EU budget.
The proposed structure could allow for prompt disbursement of funds, as planned by the end of the second half of 2021. Poland and Hungary have been impeding the €1.8 trillion corona package, which encompasses the multi-year EU budget 2021-2027, because they object to the proposed linkage between aid and the rule of law. If no accord is reached at the upcoming summit, the EU may face its first-ever emergency budget since more than three decades, with the recovery fund potentially stalled.
According to the Commission's preferred model, Poland and Hungary could opt to participate or not. However, their participation would offer little benefit, as the rule-of-law mechanism they have rejected would still be adopted. This is possible because, unlike the budget and recovery fund, a unanimity requirement does not apply to such mechanism.
Regardless of the outcome, the rule-of-law condition would still apply, effectively linking aid to compliance with democratic norms and the rule of law.
The EU building in Brussels serves as a backdrop to this ongoing impasse.
[Enrichment Data] The EU's €750 billion Next Generation EU recovery fund is experiencing obstacles due to resistance from Poland and Hungary regarding rule-of-law criteria. Although the funds do not require unanimity among all member states for their distribution, funds for non-compliant nations can be withheld or suspended based on rule-of-law non-compliance. If Poland and Hungary persist in their veto, the EU can proceed with the recovery fund for cooperating member states, possibly reallocating or offering alternative financing routes to the obstructionist nations. The legal framework allows flexibility among cooperating members, with extreme measures involving treaty changes or politically charged options like Article 7, which strip voting rights, being considered unlikely at present.
- Despite their objections to the rule-of-law conditions, the EU recovery fund's proposed structure could enable prompt aid disbursement without Poland and Hungary's participation, mirroring the EU unemployment benefit, 'Sure.'
- Regardless of whether Poland and Hungary choose to participate or not, the rule-of-law condition would still apply, effectively linking aid to compliance with democratic norms and the rule of law, even without their involvement.
