Parliament and Council agree rule of law conditionality for EU funding

Since mid-October the Council of Ministers and the European Parliament have been trying to determine how to stop EU budget payments to Member States that breach the rule of law. Yesterday, the Council and Parliament reached a historic provisional agreement to establish a mechanism to suspend budget payments to Member States that violate the rule of law and fundamental rights – such as freedom, democracy and equality – including safeguarding media freedom and protecting against corruption.

Under the provisional agreement, it will be for the European Commission, together with the Venice Commission of the Council of Europe, comprising legal experts on constitutional matters, and the EU Agency for Fundamental Rights, to find if there is a risk of breaches. Once a breach is identified, the Commission will propose the triggering of the conditionality mechanism and the Council will then adopt the proposed measure by qualified majority. The Commission has a right to convene the Council to ensure that the deadline is adhered to.

The decision stems from a 2018 request by the European Parliament to the Council, asking it to determine whether Hungary was persistently breaching the EU’s founding values under the so-called Article 7 mechanism, relating to the Treaty on the Functioning of the European Union (TFEU). This was the first time that the Parliament had made such as request. It did so in an effort to address concerns over the independence of the judiciary, freedom of expression, corruption and the rights of minorities and migrants. The previous year the Commission requested EU action about threats to the independence of the judiciary in Poland, the Parliament agreed.

Since then the Parliament has consistently argued that the existing tools, like the Article 7 procedure and the annual rule of law reports, were ineffective and they bemoaned the lack of significant progress to address the rule of law issues in Hungary and Poland. Most recently, the liberal (Renew Europe) Slovakian MEP Michal Šimečka, told a plenary session of the European Parliament on 5 October that, ““Monitoring alone will not bring back judicial independence in Poland”.

Indeed, the so-called mechanism for rule of law conditionality comes as a number of Member States across the bloc have in recent years worked and implemented legislation threatening the free press, undermining the independence of the judiciary and silencing of civil society.

Crucially, yesterday’s agreement is broad in scope, going beyond cases of corruption and fraud, but the mechanism can be triggered for breaches of fundamental values including, freedom, democracy and the rights of minorities.

Of importance is that the Council can decide to suspend EU funding for Member States by qualified majority voting. Under the Article 7 procedure, sanctions require unanimity from all member of the Council. This change removes a key hurdle in tackling the problems that were seen in Poland and Hungary.

Speaking after the agreement was reached, the Parliament’s co-rapporteur of the file, Finnish Conservative (EPP) MEP, Petri Sarvamaa, hailed the agreement as “a milestone for protecting EU values. For the first time, we have established a mechanism that enables the EU to stop funding governments that disrespect our values such as the rule of law”.

The provisional agreement now needs to be formally adopted by the Parliament and the Council.