BRUSSELS ― The European Commission is set to tighten the screws on countries that breach democratic norms by linking billions of euros in payouts to adherence to European standards.
It means that governments, notably Hungary, which have fallen foul of EU rule-of-law standards through crackdowns on judicial and media freedoms, risk losing substantial funding from the EU’s centralized budget.
The EU’s 2028-2034 spending plan, scheduled to be published next Wednesday and marking the start of at least a couple of years of laborious negotiations, will extend the link between payments and democratic backsliding, according to a document seen by POLITICO. Previously, only parts of the €1.2 trillion budget have been linked.
The move is likely to exacerbate tensions between the Commission and Hungarian Prime Minister Viktor Orbán, who faces the very real prospect of losing power after 15 years in an election slated for 2026. He’s had a turbulent relationship with EU policymakers and fellow governments, which have criticized what they see as his Russia-friendly and authoritarian policies.
While the EU has taken action against Hungary and already withheld some funding ― and Orbán has made life difficult by threatening to block European efforts to sanction Moscow ― the next budget “will provide for a streamlined and harmonized conditionality system for all EU funds allocated to member states,” according to the document.
The Commission wants to move away from the current system where “member states with particular issues could be tempted to shift some investments between programs to avoid being subject to a particular condition,” it states.
Several EU countries supported tightening the link between the rule of law and funding in their submissions to the Commission ahead of the budget proposal. After its publication, governments will begin negotiations with each other on a final text ― but this is a lengthy process that is not expected to conclude until 2027.
“The Conditionality Regulation must be applied to all EU funding,” Finland wrote in its position paper on the new budget, seen by POLITICO.
But Hungary retorted in its own document that these rules “allowed for exerting arbitrary political pressure in policy areas unrelated to the protection of the Union’s budget.” Slovakia, which has also been criticized over rule-of-law issues, echoed these arguments in its own submission.
Out of office
Hungary is already losing out on €18 billion in funding that was suspended over its breaches of European law in the past few years. Orbán, who is campaigning on an anti-EU platform, is unlikely to make moves to claim back the payments before he faces the public vote.
According to an EU diplomat, the Commission is exploiting Orbán’s domestic weaknesses ― he is trailing behind his conservative pro-EU rival Péter Magyar in the polls ― to propose stricter rules. With national capitals not expected to vote on the new rules until 2027, there’s a chance Orbán might be out of office before the budget is approved.
Commission officials are confident that a Magyar-led government would mend ties with Brussels and implement the EU-required reforms to access blocked funds.
Under the plan, the budget would contain a direct link between a government’s breach of the rule of law and the related payment that is put on hold, an EU official said.
This means that while farmers’ subsidies will be untouched by a government’s authoritarian drift, a student exchange program might suffer if there have been breaches of academic freedom.
The Commission wants to keep the money flowing to the recipients of EU funding ― such as NGOs or universities ― regardless of whether a government complies with the rule of law.
The overall idea is that civil society shouldn’t bear the brunt of a leader’s misdoings.
Renew, the European Parliament’s liberal group, wants to take this a step further. It supports directly handing the frozen EU funds to civil society, effectively bypassing the central government.
This new system, known as “smart conditionality,” would mark a change from the current rules, where frozen funds are handed back to the EU’s 27 countries collectively after an expiration date.
“We set clear conditions: No EU money for autocrats, but continued support for civil society,” Valérie Hayer, the chair of Renew, said on Thursday. “She [Commission President Ursula von der Leyen] made a commitment. Now it’s up to her to keep her word.”
However, “smart conditionality” has been criticized on the grounds that it reduces the incentives for national governments to carry out the required reforms.
Commissioners are expected to iron out this issue during emergency talks on the budget slated for the weekend.
The post Brussels pushes to block budget payouts to EU’s democratic backsliders appeared first on Politico.
