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Deal between Council and Parliament on rule of law and EU budget payments

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06 November 2020

The Council and the Parliament have reached agreement on new rules that would link payments from the EU budget to conditions related to the rule of law in the member states. The final text, negotiated in secret trilogues - a long-standing anti-democratic practice of the EU law-making process - is not yet public and still has to be signed off by the Council and Parliament.

Rule of law conditionality: MEPs strike a deal with Council (EP press release, link):

"A broader concept of breaches of the rule of law

MEPs succeeded in ensuring that the new law does not only apply when EU funds are misused directly, such as cases of corruption or fraud. It will also apply to systemic aspects linked to EU fundamental values that all member states must respect, such as freedom, democracy, equality, and respect for human rights including the rights of minorities.

Parliament’s negotiators also insisted that tax fraud and tax evasion are considered possible breaches, by including both individual cases and widespread and recurrent issues.

Moreover, they succeeded in securing a specific Article that clarifies the possible scope of the breaches by listing examples of cases, such as threatening the independence of the judiciary, failing to correct arbitrary/unlawful decisions, and limiting legal remedies .

Prevention

Crucially, MEPs succeeded in keeping a strong preventive aspect for the mechanism: not only can it be triggered when a breach is shown to directly affect the budget, but also when there is a serious risk that it may do so, thus ensuring that the mechanism prevents possible situations where EU funds could finance actions that are in conflict with EU values."

A writeup of the deal by Politico (link) is rather less celebratory, noting that:

"The mechanism also does not cover broad rule-of-law challenges, but rather focuses on the principles of the rule of law which "affect or seriously risk affecting the sound financial management of the EU budget or the protection of the financial interests of the Union in a sufficiently direct way."

Nevertheless, members of the European Parliament did win some concessions on how the mechanism would work, including an explicit mention of "endangering the independence of judiciary" as one issue that may be indicative of breaches of the principles of the rule of law.

A compromise was also reached on the timeline for adopting any cuts to funding, with the Council set to adopt a decision within one month of receiving a Commission proposal — with a possible two-month extension. To address concerns from MEPs who said the mechanism could be ignored by member countries, the compromise also notes that the Commission would use its rights to convene the Council "where it deems it appropriate.""

Professor Laurent Pech, a long-standing critic of the EU institutions' failure to take meaningful action to deal with the attack on democratic standards by the Polish government in particular, remarked on Twitter (link) that he is yet to be convinced the new rules "won't make situation actually worse by adding another toothless tool which will lead to more time wasting & fewer use of infringement actions".

Further reading

• Proposal for a Regulation on the protection of the Union's budget in case of generalised deficiencies as regards the rule of law in the Member States (EP, link)