Hungary, Poland Refuse To Budge Hours Before Before EU's In-Person Budget Summit

Hungary, Poland Refuse to Budge Hours Before Before EU's in-Person Budget Summit

With slightly over a day left before the crucial EU summit, Hungary and Poland still refuse to budge and green-light the seven-year budget and the COVID-19 recovery plan, triggering speculation on whether the bloc will resort to a last-minute compromise or remain steadfast in defending the contentious rule-of-law clause

BRUSSELS (Pakistan Point News / Sputnik - 08th December, 2020) With slightly over a day left before the crucial EU summit, Hungary and Poland still refuse to budge and green-light the seven-year budget and the COVID-19 recovery plan, triggering speculation on whether the bloc will resort to a last-minute compromise or remain steadfast in defending the contentious rule-of-law clause.

At the December 10-11 summit, which will be held in person, the EU leaders are set to make a final decision on the 1.1 trillion euro ($1.3 trillion) budget for 2021-2027 and the 750 billion euro recovery plan. Though the bloc reached a consensus on the two issues back in July, a controversy has arisen over a clause that makes access to EU funds conditional on member states' commitment to the rule of law.

At a meeting of 27 EU ambassadors on November 16, Poland and Hungary refused to give their consent to the recovery fund and budget in opposition to the rule of law mechanism, outlining their belief that it could result in double standards applied to different member states.

The move has since sparked a debate over a possibility for the bloc to abandon the unanimity principle in order to overcome the rebel nations' veto, a power that Polish Prime Minister Mateusz Morawiecki defends as "a safety valve" that keeps the EU together.

German Chancellor Angela Merkel has tried for more than a week to find a way out of the deadlock, but apparently to no avail so far.

WHAT COULD BE A LAST-MINUTE COMPROMISE?

Poland and Hungary on one side and the European Commission on the other appear to be entrenched in their positions, which means that it would not be easy to find an agreement in a few hours left before the summit.

Speaking at the European Parliament on November 25, Commission chief Ursula von der Leyen expressed her dismay at the rebel nations opposing the clause she says they agreed to back in July. According to the top EU official, "it is difficult to imagine anyone in Europe having a problem with that."

The commission chief finally said that the two can "go to the European Court of Justice and have the new rules scrutinised down to the last detail," but should not do it "at the expense of millions of Europeans waiting desperately for our help."

Hungarian Prime Minister Viktor Orban, in turn, has suggested that the discussion about the rule of law mechanism should be delayed, so that the pandemic funds could be quickly unblocked.

"The countries that are in difficulty want money quickly - let's give them the money. Other countries want new state-of-law rules - OK, let's discuss it. We must do the first thing straight away, the second is less urgent ... The Germans could separate crisis management from the rule-of-law discussion," Orban said.

The face-off over the rule-of-law clause, a political hot potato, thus might be finally pushed back, to let the European Commission come up with a "plan B."

HUNGARY, POLAND HAVE MORE TO LOSE OUT

Experts say that Warsaw and Budapest have much to lose if they are finally excluded from the EU's recovery plan.

According to Etienne de Callatay, chief economist at Orcadia Asset Management in Luxembourg and former CEO of an investment bank, it will be "a dead loss of several billion euros for Poland and Hungary each" should they be kicked out of the recovery instrument, which includes 390 billion euros in grants.

"On the other hand, for the EU long-term budget that the two countries are also blocking (more than 1,000 billion EUR), the development funds they have received since their accession to the Union are a real 'gift' from Europe and losing them would be very serious for both countries. They can't afford it," Callatay told Sputnik.

The expert did not rule that the sides would arrive at some last-minute compromise, given the importance the commission attaches to the coronavirus recovery plan, but expressed belief that the rebel nations risk losing out more from their revolt than the bloc itself.

"The ultimate danger - a departure from the EU for Poland and Hungary - would not be a catastrophe for the Union. A refocusing of the EU would be a good thing. The enlargement of the EU preceded the deepening, it was a mistake ... The EU might be stronger afterwards," he argued.

Pierre Vercauteren, a political sciences professor at UCLouvain University in Belgium, agrees that a prospect of being deprived of the EU's annual development funds would be "very significant loss" for the two countries.

"This explains why in recent days, Poland especially, seems to be adding water to its wine," Vercauteren told Sputnik.

After all, when joining the bloc back in 2004, the two countries committed themselves to a bunch of values, including the rule of law conditionality, the professor continued.

"On a proposal from several groups in the European Parliament, the Commission is threatening Warsaw and Budapest to apply the enhanced cooperation mechanism, provided for in the Lisbon Treaty to allow the 25 other countries to share the financial manna without including Poland and Hungary, or even the 24 other countries if Slovenia follows Hungary and Poland as it threatened to do. This is not a blackmail by the Commission vis-a-vis the two countries. Budapest and Warsaw have committed themselves in 2004 by joining the Treaties, to this 'rule of law' conditionality," Vercauteren said.

The EU, too, is not ready to give up on its core values, despite all attempts to find a solution, according to the expert.

"Neither side wants to give in, but these two countries must understand that they cannot have a purely utilitarian and even consumerist EU membership," the professor stated.

For Thierry Mariani, a member of the European Parliament's foreign affairs committee, the current row is another "hour of truth" for the bloc, which will make every effort to save face, though.

"I rather believe that we will see again in the next few days an agreement in which no one loses face, which postpones decisions until later," Mariani told Sputnik.

In addition, the commission has a leverage to impact national governments, he noted.

"Another question is also whether the Commission can buy the peoples on behalf of the Union. Look at Italy, once again pro-European if the European windfall is poured out in grants and loans at zero interest," the French lawmaker said.

Jerome Riviere, another European Parliament member from France's right-wing National Rally party, believes that the EU will finally have to give ground in this row.

"It needs its recovery plan and its 2021-2027 budget, urgently. Removing Poland and Hungary from distribution using the enhanced cooperation mechanism cannot be improvised in a week. If the European Commission wants to play dumb, it will have to work next year with provisional twelfths in the first few months. It always comes back to the arrogance of the Brussels Eurocrats," Riviere told Sputnik.

The lawmaker referred to the "provisional twelfth" system, which envisages that unless the bloc agrees on the budget by January 1, each chapter of the budget will be funded monthly up to a maximum of one twelfth of its appropriations in previous year.

Riviere shares the Hungarian government's view that the rule of law clause is nothing but blackmail.

"The Commission is blackmailing Poland and Hungary by telling them 'vote the budget' and by accompanying this invitation with an equally obvious threat: 'if we feel that you do not respect European values, you won't get a penny. The Commission's intransigence testifies to the will to replace the nations, the sovereign states that are members of the EU," the lawmaker argued.