Solidarity has not been a feature of the European Union’ pandemic response package. That was supposed to change with the passage of the 2021-27 EU budget bill, which totaled 2.2 trillion US Dollars and included more than $900 billion for the bloc’s pandemic relief efforts. However, Hungary and Poland were able to manipulate the negotiations and break through EU protections against authoritarianism to receive the EU funds. Unsurprisingly, this triggered a heated debate over the state of democracy in the European Union.
Judiciary independence has been under attack for years in Poland and Hungary. The Polish lower house of parliament, the Sejm, passed a “muzzle law” in 2019 to crack down on judges critical of the government. The law expanded the powers of a disciplinary body that punishes judges for offenses like criticizing the right-wing populist ruling party, Law and Justice (PiS), critiquing the state of democracy in Poland, and speaking out against the current purge of dissident judges. Punishments range from wage cuts to outright removal. The Ministry of Justice also waged a social media attack where professional trolls were brought on to harass and defame ‘disloyal’ judges on Twitter.
Since its democratization following the fall of the Soviet Union, Hungary has similarly been plagued by low levels of trust in government and a population unwilling to participate in the democratic process. The problem is particularly acute in rural regions, which are much less well-off than cities like Budapest. It was rural areas that propelled Victor Orbán to power on a platform of Euroscepticism, anti-German hostilities, and a focus on traditional (read: anti-LGBTQ and xenophobic) family structures. Recently, the Hungarian Parliament also granted Orbán the power to rule by decree, a decision that rules out the possibility of elections for the foreseeable future since the law has no expiration date.
Because of these circumstances, the two countries could have been barred from receiving EU funds under the proposed rule-of-law condition. It stipulates that only member states that adhere to basic democratic principles like the rule of law, judiciary independence, and the protection of minority rights are eligible for EU funding. The governments of Hungary and Poland accused the European Parliament of targeting this portion of the bill at them specifically. Polish Minister of Justice Zbigniew Ziobro charged that the rule would “radically limit Poland’s sovereignty.”
The European Parliament first initiated the rule-of-law condition for the receipt of EU funds in 2018. Its initial aim was to limit or entirely cut off EU funding for a broad range of offenses. However, after a prolonged debate, its applicability was restricted to matters relating to the expenditure of EU funds. Hungarian Prime Minister Viktor Orbán has repeatedly been accused of misappropriating EU funds to reward his political allies.
Since 1998, Orbán has led a campaign to privatize agricultural land to curry favor with his populist base, leaving many farmers with less political capital without any recourse to EU agricultural subsidies. Similarly questionable is the way the Hungarian government distributes aid from the EU Cohesion Fund, which the EU set up to decrease regional development disparities across the bloc. Rural Hungarian towns often only receive their portion of the payments from the regional committees that oversee distribution if their inhabitants support Orbán’s political party, Fidesz. If the rule-of-law condition had passed in its original form, the EU could have held Orbán accountable for corruption by excluding Hungary from receiving certain relief packages.
To ensure that Hungary could continue to rake in EU subsidies and aid, Orbán came to an agreement with Polish Prime Minister Mateusz Morawiecki. Neither Poland nor Hungary would approve the budget bill if the other didn’t do so as well. The result was a stalemate: the budget had to pass unanimously, and to exclude either country from the vote would have required the unanimous vote of all other member states.
To break the gridlock, the German government, which currently holds the presidency of the European Council, brokered a compromise that effectively allowed Hungary and Poland to bypass the rule-of-law condition. The compromise is certainly understandable, given the urgent need for global pandemic relief. However, the EU’s leniency also sets a dangerous precedent for illiberal member states to hold the EU hostage. If this continues to happen, it could erode the very democratic principles the Union was built to enshrine.
Now, the European Court of Justice would have to approve the rule before it is used against any member state. Morawiecki and Orbán have also already pledged to challenge the rule in court. Moreover, any sanctions would have to be imposed by a majority vote in the European Council, which consists of the heads of state of the 27 EU member states. In its previous incarnation, the rule-of-law condition would have been applied more readily, with the same majority vote required only to block its use. In response to these new rules, Morawiecki declared that funds for Poland would now be “safe” from the EU’s attacks. Vice President of the European Parliament Katarina Barley lamented that the rule had been, “watered down significantly.” One bright spot remained: the European Parliament voted to allow the condition to be applied more broadly.
While the situation in both countries makes the idea of pushing them back toward democracy with the threat of sanctions very attractive, the EU’s past pandemic response also provides food for thought. When Italy was rocked by COVID last March, Prime Minister Giuseppe Conte registered Italy’s PPE needs on the EU’s Common Emergency Communication and Information Systems (CECIS). However, the EU response was incredibly delayed. The supply gap was filled by China — a hit for a bloc already struggling to contain Chinese influence. Later joint EU PPE purchases were dragged out for months, as countries chose to individually negotiate with China. Meanwhile, restrictions placed on PPE exports across internal EU borders strained the EU’s cohesion. Accordingly, the budget bill with its pandemic relief was viewed as a way of finally achieving a coordinated response to COVID-19 and strengthening relations within the EU. Delaying negotiations in hopes of persuading Orbán and Morawiecki to drop their objections would have been bad PR considering the dire economic situation. Perhaps the Italian Minister for European Affairs Vincenzo Amendola captured the current moment best when he said, “[Polish and Hungarian] veto threats don’t scare us. If we’re scared, then it’s of an EU that compromises its core values of freedom, democracy and the rule of law.” Yes, it would have been devastating had the bill not been passed. The EU would have run on an emergency budget and the program cuts would have been numerous. Nevertheless, pandemic relief could have been arranged between the remaining 25 EU member states outside of the EU institutions, as funds were during the European sovereign debt crisis. More likely than not, Hungary and Poland would have caved at the last minute. After all, as two of the largest net recipients of EU funding, they rely on the EU far more than it does on them. Compromising with Poland and Hungary by putting the rule of law on the back burner allowed the budget bill to pass. It also reads as an endorsement of both countries’ alarming creep toward authoritarianism.
Original graphic by Amy Lim