European Union reaches deal on budget and stimulus package

European Union leaders on Thursday clinched a deal on a massive long-term budget and a fund to help the bloc’s ravaged economies recover from the impact of the coronavirus, but critics said the agreement lets Hungary and Poland off the hook for abusing the rule of law.

The 1.82 trillion-euro seven-year budget and recovery package was meant to come into effect on Jan. 1. Poland and Hungary agreed to the deal in July but later vetoed it, fearing the new “rule of law mechanism” might target them for possible breaches of Europe’s democratic standards.

“Now we can start with the implementation and build back our economies. Our landmark recovery package will drive forward our green and digital transitions,” EU Council President Charles Michel said in a tweet after the deadlock was broken at an EU summit he chaired in Brussels.

The breakthrough came just days after it appeared that Poland and Hungary’s 25 EU partners might go it alone and create a new coronavirus recovery package without them, potentially depriving them of billions of euros worth of assistance.

Hungarian Prime Minister Viktor Orban was in a celebratory mood.
“It was a nice evening. We can chill the champagne,” Orban said in a video posted to his Facebook page, trumpeting the news that “common sense has won.”

“We have averted the danger of budgetary means being used to force Hungary to make decisions that it doesn’t want to make or accept, and in the end we defended Hungarians’ money which will come in handy for the economic developments of the coming years,” he said.

Also taking to Facebook, Poland’s Prime Minister Mateusz Morawiecki described the deal as “a double victory.”

“The EU budget can be implemented now, and Poland will receive from it 770 billion zlotys (173 billion euros.) This money is safe because the conditionality mechanism has been limited by very precise criteria,” he said.

Under the compromise, the European Commission, the EU’s executive arm, would draw up guidelines for using the new rule of law mechanism and what might trigger it, with Europe’s top court weighing in on their validity. The commission would take no action against any country until the guidelines are drafted.

A French official, who was not permitted to discuss the sensitive deliberations on the record, said that the steps taken against any country for failing to uphold the rule of law would apply retroactively from Jan. 1, 2021.

French President Emmanuel Macron tweeted that the leaders “adopted a robust agreement on the mechanism to put in place, in respect of the rule of law. Europe moves forward, united, and displays its values.”

While acknowledging that national governments are in dire need of coronavirus funds, some warned of the dangers of delaying action yet again against Hungary and Poland, whose nationalist governments have been accused of undermining judicial independence and media freedoms.

Daniel Freund, the Green group negotiator on the rule of law in the European Parliament, warned that the compromise being discussed would put the system “on hold for 1-2 years.”

“Europe’s rule of law is in crisis,” he said, adding that EU members should not be pressing the European Commission to avoid enforcing “existing laws while judicial independence is abolished in Poland or billions of EU funds end up with Orban’s family and friends.”

Eve Geddie, Director of Amnesty International’s European Institutions Office said the delay “will allow for irreparable damage to the human rights of people in Poland and Hungary, and to the integrity of the rule of law across the EU.”

Had the leaders failed to adopt the budget for 2021-2027 before the end of the year, the bloc would have been forced to function on limited resources, with a maximum of one-twelfth of the budget for the previous financial year to be spent each month.

Many projects for Poland and Hungary — which are already being formally investigated by the EU for their potential violations of the rule of law — would have been held up.