From 2021 onwards, the European Union (EU) has employed a so-called conditionality mechanism. This mechanism essentially allows the EU to partially suspend or reduce financial aid to Member States where the rule of law is being violated. Notably, the mechanism has already been invoked once, effectively blocking 6.3 billion euros from reaching Hungary. This was largely due to the country’s subpar efforts in combating corruption.
In addition to this mechanism, the EU has other measures to safeguard its financial interests. One such measure is the ‘Article 7 procedure’, although it is often criticized for its inefficiency. This procedure allows the EU to suspend the voting rights of Member States in the Council. Other measures include the Commission’s ability to initiate infringement procedures and the existence of provisions on cohesion policy and payments from the corona recovery fund.
Besides Hungary, the EU has also taken measures against Poland due to concerns about the rule of law. However, it should be noted that the new government in Warsaw has only recently proposed an action plan to address these criticisms. The measures that caused concern were primarily implemented by the previous conservative government.
Insufficient control
The Court of Auditors has pointed out that there is inadequate monitoring of the effectiveness of remedial measures taken by Member States in response to European criticism. They argue that in practice, these measures often amount to little more than checking boxes. In addition, the implications for other budget items, such as agricultural policy, are not sufficiently considered.
Consequently, the Court of Auditors recommends a more rigorous monitoring by the European Commission of the effectiveness of measures designed to protect European financial interests. They note that the exact consequences of these measures – estimated to be 22 billion euros for Hungary and 134 billion euros for Poland – can only be accurately quantified in the future. In the meantime, the affected Member States may be unable to fulfill their obligations due to the suspension of European aid. This could jeopardize the implementation of EU programs and policy objectives, with ordinary citizens potentially suffering the most. For instance, students might be unable to participate in the Erasmus+ exchange program.
Finally, the Court of Auditors warns of the potential for political considerations to influence the decision to release or continue to withhold EU funds. They argue that such decisions should be based solely on technical and legal arguments. They cite the decision made in December of last year to release 10 billion euros in frozen funds for Hungary as a potentially politically motivated move. Notably, this decision coincided with a vote on opening accession negotiations with Ukraine, a move that required Budapest’s approval.
