Linking EU Budget Allocations to the Rule of Law: the Case of Poland and Hungary

Abstract

The article discusses the possible introduction of the rule-of-law conditionality, linking the provision of payments from the EU budget with the observance of the principles of the rule of law by the Member States. It is noted that some other tools previously used to achieve integrity of values in the EU have proved to be inefficient. In particular, all attempts to impose sanctions provided for by Article 7 of the Treaty on the European Union for violating the principles of the rule of law against Poland and Hungary have not yet led to any result. At the same time, one can see how different conditionalities for receiving funds or other benefits from the EU are becoming an increasingly common internal EU governance mechanism, although initially this tool was used mainly in building external relations. It should be noted that the possibility of budgetary sanctions is spelled out in the draft budget, but the mechanism for their introduction is not precisely defined. This is partly due to the need to reach a consensus at the EU summit, which agreed on the budget in July 2020. European leaders opted for vague language for the budget sanctions mechanism to be approved in principle. This once again shows the complexity of making tough decisions within the EU. Nevertheless, one can see the consistent actions of European structures and Member States to provide a new mechanism for the protection of European values. The economic nature of this mechanism, as well as its relative effectiveness in other areas, may increase the interest of a number of EU Member States in it. This creates a potential risk for the authorities of Poland and Hungary, which may lose some of the subsidies from the EU. However, it cannot be ruled out that the EU approach of seeking a compromise will prevail even after a new sanctions instrument appears at its disposal.