Insight 1998
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23
Hungary, Poland and the EU: It’s the money, stupid? by Camino Mortera-Martinez and Sander Tordoir, 8 February 2023 After years playing by the legal book, the EU is now using its purse strings to curb democratic backsliding in Poland and Hungary. This is a good tactic, but not a sustainable strategy in the long-term. On December 12th 2022, the EU froze €6.3 billion of cohesion funds that were due to Hungary. The decision came after months of back-and-forth negotiations between the European Commission, which favoured a higher penalty; the Council of Ministers, which was wary of the political and economic consequences of such freeze; and the Hungarian government, which insisted the whole thing was a calculated smear campaign against Prime Minister Viktor Orbán. In truth, Orbán had been irritating partners by holding up EU decisions on sanctions, energy and military support to Ukraine. But his refusal to back an €18 billion aid package to Ukraine at the beginning of December proved a step too far. For the past three years, Warsaw and Budapest have managed to wield their veto power to extract concessions from Brussels in their long-standing dispute over the rule of law. In 2020, Hungary and Poland successfully managed to postpone the introduction of the EU’s rule of law conditionality mechanism in exchange for backing the bloc’s post-pandemic recovery fund. Last year, Poland threatened to block parts of the EU’s landmark ‘Fit for 55’ climate package unless Brussels green-lighted Warsaw’s plan for spending money from that fund. In December, Poland also briefly prevented aid to Ukraine, as it opposed a much-awaited plan for a minimum EU corporate tax rate which was part of the same negotiating package. And Budapest has been a constant thorn in the EU’s side as it tries to agree on a common response to Vladimir Putin’s war in Ukraine. The EU’s strategy to deal with democratic backsliding in Poland and Hungary has been one of caution. The European Commission has repeatedly taken both countries to court for failing to comply with EU law. The Commission has also initiated so-called Article 7 disciplinary proceedings against Poland for breaches of the rule of law. The European Parliament has instigated a similar proceeding against Hungary and recently passed a resolution branding the country as an ‘electoral autocracy’. None of this has worked: Poland and Hungary disregard court decisions or re-litigate them endlessly; and they have supported each other in staving off their respective Article 7 procedures – which, if successful, would see Warsaw and Budapest losing their voting rights in the Council of Ministers but require unanimity to succeed. CER INSIGHT: Hungary, Poland and the EU: It’s the money, stupid? 8 February 2023
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