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Why is the EC releasing funds to Hungary and Poland in face of democracy threat?

Both countries have strongly denied allegations of corruption and judiciary interference, despite rulings from the ECJ and proceedings by EC.

EARLIER THIS MONTH, the European Commission (EC) approved the release of billions of euro of Covid-19 recovery funding to Poland, despite unprecedented dissent from within its ranks.

The EC is the executive body of the European Union (EU), and is made up of 27 commissioners. It controls the money that goes to EU member states. EC president Ursula von der Leyen supported releasing the money to Poland, but five of her fellow commissioners dissented.

According to a letter seen by Politico, Executive Vice President Frans Timmermans strongly objected to the move, saying that he “disagrees with the fact that the legal order is being adjusted to the political reality, instead of the other way around.”

Over the past number of years, Poland, along with Hungary, has clashed repeatedly with EU bodies and institutions, including the European Court of Justice (ECJ) and the EC itself. The reasons for this have been allegations of corruption, interference in the judiciary, and democratic backsliding in the two countries.

Both countries have strongly denied the allegations, however, despite numerous rulings from the ECJ and infringement proceedings launched by the EC.

Timmermans’ concerns echo those of hundreds of MPs, legal experts, and civil liberties organisations across the EU, who all say that democracy is under serious threat in Poland and Hungary, and that the EU is not doing enough to address the situation.

Eroding the rule of law

Problems with eroding the rule of law and democratic backsliding go back to 2015 for Poland, with the coming to power of the ruling PiS party.

According to Freedom House, a US government-funded think tank that focuses on democracy and political freedom, since securing power PiS has been moving aggressively to assert control over the judiciary.

These moves include reforms which put the power of appointing judges in the control of parliament, allowed the justice minister the power to dismiss presidents of courts, and which lowered the retirement age of Supreme Court justices, among others.

The government also passed laws which curbed the power of the country’s Constitutional Tribunal and installed pro-government judges on its benches.

Various European institutions – including the European Court of Human Rights, the EC, and the European Court of Justice – have ruled against the reforms, or taken infringement proceedings against Poland in recent years.

The EC launched actions in 2020 and 2021 which alleged that a Disciplinary Chamber for judges undermined judicial independence in the country, and the ECJ ordered that it be suspended.

The Polish government has responded by doubling down in many cases, refusing to accept the decisions of the EU. Last year, its Constitutional Tribunal found that parts of EU law were incompatible with the country’s constitution, which it said would have primacy over the ECJ.

This is something which is not compatible with EU law, and the decision was met with condemnation and further infringement proceedings from the EC. 

In Hungary, according to Freedom House, democratic backsliding has been ongoing since 2010, when Prime Minister Viktor Orbán’s party, Fidesz, took power.

Since then, the government has been pushing through various changes to allow the party to consolidate control and power over various institutions.

The issue in both countries has brought the ire of many of the leaders of other EU countries, as well as sitting MEPS.

“What worries me about it is, on a couple of levels, I’m worried about the fact that since 2005 really, the Commission hasn’t taken seriously issues around infringement proceedings,” says Barry Andrews, Fianna Fáil MEP for Dublin.

“The main role of the Commission is guardian of the treaties, but there’s been a very noticeable shift in policy away from guardianship of the treaties and towards keeping the member states happy.”

Andrews refers to Article 17 of the Treaty on European Union (TEU), which states that, as guardian of the treaties – the international agreements which establish the constitutional basis of the EU – the Commission’s responsibility is to enforce EU law.

“So into that vacuum, not surprisingly, various governments are emboldened to ignore the treaties, to ignore the values of the EU – rule of law, democracy, human rights, freedom of expression… and not be concerned that serious steps will be taken to remedy the situation.”

According to the Economist Intelligence Unit’s Democracy Index, 2021, just 6.4% of the world’s population live in full democracies, while 37.1% live under authoritarian regimes. According to Andrews, the trend from Poland and Hungary – and, on a smaller level, some other EU states – is part of a wider global shift away from democracy and towards autocracy.

“At some point the EC is going to have to really come to terms with this issue, and the way that Ursula von der Leyen has greenlit the Polish reconstruction fund without serious changes to judicial laws in Poland doesn’t really augur well,” says Andrews.

What can be done

The use of the EU recovery fund was seen by the EC as a way to pressure Poland and Hungary into rolling back on some of the anti-democratic initiatives they have put in place in recent years.

[The Commission] worked hard and included this almost Rule of Law conditionality, but not quite there,” says Professor Tobias Lock, Professor of Law at Maynooth University, “But what it says in the EU regulation that is of relevance here, is that every member state who receives money from the EU has to have mechanisms in place to prevent, detect and correct corruption, fraud and conflicts of interest.

“That is basically code for, they have to have a functioning legal system, so that these funds are not misappropriated.”

Poland and Hungary both challenged this conditionality to the ECJ, but Europe’s top court found against them in January, ruling that, when it comes to democratic principles, “the European Union must be able to defend those values, within the limits of its powers”.

Both Poland and Hungary are net receivers of EU funding, and so are reliant on getting the money.

“It has long been argued that if you want to hit countries in the EU, especially those who are net receivers of money… then you have to turn off the tap of EU funding,” says Lock.

“[The Commission] did that, and everybody was quite happy about that.”

However, earlier this month, the EC granted the release of the funding, with von der Leyen stating that the approval was linked to Poland implementing judicial reforms.

“The approval of this plan is linked to clear commitments by Poland on the independence of the judiciary,” she said, after the release of the funding was announced.

Under the agreement, Poland has to abolish its Disciplinary Chamber for judges, and reform the disciplinary regime, among other measures. However, many commentators, including members of the Commission, were deeply unhappy with the move, saying that it was letting Poland off the hook.

“The problem is that Poland has made all these promises, but they haven’t delivered on these promises yet, we don’t know what’s going to happen,” says Lock.

“And if they don’t deliver on the promises, or they deliver on the promises initially and then two years later they turn the clocks back, there’s nothing the Commission can do, they’ve given up that lever, for now anyway.”

A political decision?

For many looking on, the move by the EC is a result of the Russian invasion and subsequent war in Ukraine. Poland has taken in over 3 million refugees from neighbouring Ukraine since the war began, and has been lauded for its efforts.

“To me, that seems to be the most plausible explanation. I mean, why would they now release the money… I think the reason, in my view, is that they wanted to give Poland something in return,” says Lock.

“To be fair to Poland they’re doing a fairly good job of looking after the refugees, and they’re taking in way more than anywhere else. But still… they’re still violating, by and large, the rule of law while doing so.”

According to Barry Andrews, Poland “doing the right thing” in relation to Ukraine shouldn’t “lead to them doing the wrong thing in other areas”.

He says that most other EU countries were sharing the burden of helping Ukraine, “without running roughshod over the rule of law, and without ignoring the primacy of the European Court of Justice.”

“Once you let that rot come into the treaties, it’s very hard to get it out.”

What more can be done

While Hungary has yet to see the release of recovery funding, the country has said it hopes to reach a deal with the EC by the end of the year. It is likely that the EC will look for it to implement reforms to tackle corruption and democratic backsliding, before releasing the funds.

Other than withholding funding, another measure to sanction countries that are seen to be breaking EU laws and undermining the treaties is for the EC to trigger Article 7 of the Treaties of the European Union. 

This would see an offending EU country have its voting rights and other rights suspended.

“That would be the ultimate sanction,” says Professor Lock.

“Now obviously we’re not there at all, really, because this requires a relatively large majorities in the European Council, it means that such a decision to suspend voting rights… has been supported by all EU member states, except the offending member states of course.”

Only the Commission has the power to trigger Article 7, and only if there is a “serious and persistent breach by a member of state of the values of the EU”.

“Now you could argue that Hungary and Poland have seriously and persistently breached the EU’s values, but politically it has been not possible to come to such a decision,” says Lock.

The reason for this is, firstly, is that such a decision requires a unanimous decision from the European Council – the heads of State of each EU member – and Poland would likely always back Hungary, and Hungary would back Poland, in vetoing the decision.

As well as this, the move would likely shock the EU to its core, and other EU states are unwilling to go those lengths, as of yet, preferring to try other methods.

Recall the Commission

The only power the EU Parliament and MEPs have would be to vote to recall the entire Commission, in the hope that a replacement Commission would act tougher on rule breakers.

However, according to Barry Andrews, there is not a majority in the Parliament for such a drastic move, despite the frustrations of a large number of MEPs.

“Definitely not a majority for that. But there is a debate and it has been talked about,” he says.

“There are certain criteria that Poland has to fulfil in terms of judicial reform… if there’s evidence of them not actually doing what they said they would do… I think in the Autumn there might be more discussion about it.”

Andrew says he would draw some hope from the objections of certain Commission members to releasing the recovery funding, which shows that there are “very live discussions going on in the Commission”.

“Ultimately however, the people of Poland and Hungary are the ones that will have to make a big call here.”

Both Viktor Orban’s Fidesz and Poland’s PiS remain popular in their respective countries among voters. Orban secured a strong electoral victory in April, with concerns expressed by the Opposition and outside observers over the strong pro-government bias of state media and institutions.

Professor Lock says that the issue will likely continue, and that the very values of the EU will be drawn further into question.

“The EU always likes to portray itself as a community of values, but the question then is how far do those values really go? Are they just some sort of veneer and if you scrape it a bit there’s nothing good underneath it, or do they take them seriously?

“And I think there’s some doubt under that now. At the moment, we can’t be sure they’re taking them too seriously.”

This work is co-funded by Journal Media and a grant programme from the European Parliament. Any opinions or conclusions expressed in this work are the author’s own. The European Parliament has no involvement in nor responsibility for the editorial content published by the project. For more information, see here

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