EU in Deadlock: Hungary and Poland refuse to back down over ‘rule of law’ conditions

December 7, 2020

3 min read

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What's going on here?

The EU plans to deny funding to countries that do not comply with the rule of law. Poland and Hungary directly oppose this notion and have blocked the 1.8tn Covid recovery fund in protest.

What does this mean?

The rule of law is one of the fundamental values of the European Union; it underpins the independence of the judiciary and accountability of all citizens before the law. However, the EU has recently accused some member states, including Poland and Hungary, of breaching the rule of law. It has been suggested both countries have violated judicial independence and prohibited media freedom. The EU has therefore put forward a mechanism which links economic funding to compliance with the rule of law; if a country does not follow the rule, they will be ineligible to receive monetary relief. A vote on this new mechanism only needs a qualifying majority of voting member states and as such could easily be passed without the backing of Hungary and Poland.

Poland and Hungary see this new principle as a direct political attack on their governments. Hungary’s Minister of Justice, Judit Varga, stated “I think today ‘rule of law’ is everything and anything that [the EU does not] like about Hungary”. In retaliation they have refused to back the EU’s proposition to take out capital market loans which would provide the trillions of dollars needed for a Covid financial recovery package. Hungary and Poland are able to block this notion as all 27 member states must ratify the financial action for it to be passed. The two states are unwilling to compromise over the new rule of law policy so are in political deadlock over Covid aid with the rest of the EU.

What's the big picture effect?

Blocking the Covid relief fund will have great repercussions across Europe. As many member states remain in a second lockdown, the 1.8tn is necessary for the struggling European economy. Until the EU is able to strike an agreement with both Hungary and Poland, these funds will remain inaccessible. Other European countries have condemned the two states’ actions. German ambassador Michael Clauss has warned of “a serious crisis” if the financial package is not put into place soon due to the “severe economic damage” the pandemic has caused. The Eurozone economy shrank by 12.1% in the second quarter of 2020. Although the recent positive vaccine news has caused stock markets to rise, the release of this financial package would directly provide governments with the funds needed to rebuild their economies. 

Some political commentators believe the countries will back down due to the much-needed financial support the financial package will provide. However, this does not seem to be the case as both Hungary and Poland have reasserted their position as recently as Friday 20 November.  The President of the Commission, Ursula von der Leyen said the EU was willing to “listen to what the issues are and […] try to solve them”. 

European countries are in desperate need of financial assistance as the pandemic continues to grow into winter. The EU will need to negotiate quickly as Hungary and Poland appear to be unwilling to back down. However, they must not trade away the rule of law underpinning the Union, whatever the financial reward may be.

Report written by Amber Allen

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