EU talks clinch deal on withholding cash from anti-democratic states

Budget and stimulus cash could be withheld from countries breaching rule of law principles

Currently, unanimous support by EU member states is required for sanctions in the case of rule of law breaches. But under the proposed new system no single state would hold a veto. Photograph: Arterra/UIG via Getty Images

A deal that would unlock €1.8 billion in European Union budget and stimulus funds and prevent them going to states that stray from the rule of law came a step closer on Thursday, as member states and European Parliament negotiators announced they had reached an accord.

The budget and landmark recovery package designed to counteract the economic damage of the Coronavirus pandemic were agreed during the summer, but their finalisation has been held up by disagreements over how to ensure the money did not fund corruption or governments that are sliding towards authoritarianism.

Lawmakers in the European Parliament had also pushed for additional funding for a number of EU programmes that had been bargained down as the price of clinching agreement on the €1.1 trillion 2021-2027 budget.

Currently, unanimous support by EU member states is required for sanctions in the case of rule of law breaches. Hungary and Poland -- which have both been subject to infringement proceedings over accusations of attempts to undermine judicial independence in recent years -- have agreed to protect each other from any such move.


But under the proposed new system agreed in negotiations between member states and the European Parliament, no single state would hold a veto. The European commission would have the task of establishing if any principles have been violated, and could propose sanctions.

EU budget funds or stimulus money could be withheld from member states where there are found to be “breaches of the principles of the rule of law”, or if governments “seriously risk affecting the sound financial management of the EU budget or the protection of the financial interests” of the bloc.

Rather than needing unanimous support, such sanctions could be authorised by a qualified majority of member states, which means at least 15 of the 27 countries representing at least 65 per cent of the EU’s 450 million population. The member state which is the target of the sanctions can hold them up by two months by calling an emergency break, but if agreed sanctions must be implemented within seven months.

The deal is subject to a vote in the European Parliament and must win the support of a qualified majority of member states in order to be finally adopted.

Nevertheless, the agreement was greeted as a breakthrough towards concluding the process, and was welcomed by the three biggest political groupings that together constitute a majority in the European Parliament.

The centre-right European People's Party of which Fine Gael is a part hailed it as a "historic agreement", while the head of the rival socialist S&D bloc Iraxte Garcia called it "a victory for the European Union as a community of shared principles".

"It is unacceptable that some EU countries continue to use EU taxpayer's money to reinforce their own illiberalism and undermine the fundamental rights of EU citizens. Today we take an important step to tackling this," said Dacian Ciolos, president of Fianna Fáil's Renew Europe political group.

“This is a ground-breaking mechanism which we believe will play an important role in reinforcing the rule of law and moving the European project forward.

Naomi O’Leary

Naomi O’Leary

Naomi O’Leary is Europe Correspondent of The Irish Times