The EU’s highest court has ruled that Brussels can cut budgetary funds from member states if their use violates the rule of law. It is still questionable whether and when the corresponding procedure will be used.
The storm of enthusiasm was not long in coming. Conservative MEP Monika Hohlmeier wanted to speak of a “historic success” when the European Court of Justice (ECJ) announced its judgment in Cases C-156/21 and C-157/21. Green MEP Terry Reintke was pleased to say that the EU’s supreme court had sent a “strong signal for democracy and the rule of law”.
The joy in the EU Parliament is great that the Luxembourg judges on Wednesday declared a procedure to be legal, with which violations of the rule of law can be punished financially for the first time. What is meant is the so-called “Regulation on the conditionality of the rule of law” – also known as the rule of law mechanism – which has been in force for a good year.
Core values at risk?
The basic idea is simple: if an EU state violates fundamental principles such as the separation of powers or freedom of the press, it must expect that funds from the joint budget will be withheld from it in the final step. However, this only applies to violations that are directly related to the EU’s budget management – if, for example, there is a risk of corruption and nepotism in the use of EU funds in a country because the courts there do not work independently.
This precision is important. The fact that the rule of law in a member state is generally a cause for concern does not provide any means of activating the mechanism. A connection to the “financial interests” of the EU must already exist. Only with this restriction did Poland and Hungary, who have been arguing with the EU for years about compliance with the rule of law, grudgingly agreed to the procedure in December 2020. The payment of billions in aid from the Corona development fund was on the brink.
Both countries initially speculated for a long time on watering down the mechanism and then decided, when it could no longer be prevented, to take legal action before the ECJ. There is no legal basis at all for the new procedure in the EU treaties, she argues. The competences of the Union are being exceeded and the principle of legal certainty is being violated.
The court has now dismissed these reservations in their entirety. The EU is based on common values, including the rule of law and solidarity, the judges said. Since “respect for common values is thus a prerequisite for the enjoyment of all those rights that result from the application of the Treaties to a Member State”, the Union must also be able to defend these values. If there is a risk that a member state will not use EU funds in their interest, the economic interests of the EU will be adversely affected, it said. And if there is a “real connection” here, you can also link the payment to appropriate conditions.
Now it’s up to the Commission
But can the rule of law mechanism actually be triggered? The German FDP MP Moritz Körner, who negotiated the procedure for the European Parliament, dampens the high expectations a little. It is initially up to the Commission to examine the verdict, says Körner. And it is to be feared that President Ursula von der Leyen will delay implementation. By pointing out that the judgment of the European Court of Justice was still pending, the head of the commission had previously defended herself against the criticism that she was being too lenient with Poland and Hungary.
In a first statement, von der Leyen welcomed the verdict. However, she also said that her authority would first analyze the reasoning and the possible effects of the judge’s decision. “In the coming weeks” they will then decide on “guidelines for the application of the mechanism”. The violations of the two states are already clearly identified in the Commission’s rule of law reports.
However, there are also political considerations at play. Does the Commission want to confront Poland at a moment when there were signs of rapprochement? Does she want to trigger the mechanism before the parliamentary elections in Hungary, which can be understood there as interference in the election campaign? MEP Körner admits that the entire EU is currently under geopolitical pressure. However, that should not prevent the Commission from carrying out its task as guardian of the treaties.
The Brussels correspondent Daniel Steinvorth Twitter Follow.