Orbán is not alone yet, but for a moment, Poland wavered

Thursday evening seemed to be a turning point in the tug-of-war of linking the rule of law mechanism to the EU’s multiannual financial framework. Jaroslaw Gowin, Deputy Prime Minister of one of the smaller Polish coalition parties indicated that Poland was ready to vote in favour of the EU’s seven-year financial framework and the so-called Next Generation EU recovery fund, provided that an explanatory memorandum is attached to these texts declaring that the rule of law mechanism would not be used as a political weapon but only as a guarantee that the spending of the budget does not violate democratic values.

This was a significant and unexpected change of tone considering that the Polish-Hungarian veto of the mechanism has been on the table since November. The two governments have so far stated that they are not willing to support the MFF and the NextGen EU recovery package without postponing and re-negotiating the introduction of financial sanctions for breaches of the rule of law. Both governments agreed not to change their positions in any way that would be deemed unacceptable by the other.

Thursday’s statement appears to have been a solitary move by Gowin who had been a critic of the veto himself. On Friday, a Polish government spokesperson tweeted that the government's position on the issue remained unchanged, just like the agreement between Hungarian PM Viktor Orbán and his Polish counterpart Mateusz Morawiecki on the conditions of adopting the budget, essentially demanding to block the mechanism. Later on, Deputy Foreign Minister Pawel Jablonski claimed Gowin probably ‘was not precise enough with what he was saying’ and Warsaw still considers the rule of law mechanism unlawful. ‘We are ready to talk, we are ready to come to a compromise, but there are some red lines’ he said.

Yet, we know little about how deep the differences within the Polish governing coalition are running. The statement by Deputy Prime Minister Gowin implies that the issue is also causing tensions within the Polish government. The significance of his comment is that once the argument reaches a breaking point, his party could threaten to leave the coalition, putting pressure on PiS, who could lose their majority in the lower chamber of Polish legislature. However, according to Polish newspapers, another coalition party, led by Zbigniew Ziobro and counting 18 members, is suggesting even harder action.

Orbán did not give up either and was not (yet) left alone. In his regular Friday morning interview on Kossuth Rádió, the Prime Minister said that the Hungarian government insists on the veto and maintained that it is unacceptable to link the rule of law to the EU pay-outs.

The numerous objections from Budapest and Warsaw against the mechanism include that

• it goes against the former agreement made by EU leaders at the budget summit this summer,
• there is no precise definition of the rule of law (although the draft provides a lengthy explanation of the term);
• the rule of law mechanism would be used as a political weapon;
• sanctions for breaches of the rule of law are already set forth by the Treaty of the EU (and Article 7 proceedings are currently pending against Hungary and Poland), which is why the introduction of a new mechanism contradicts the Treaties;
• it is unacceptable to link the concept of rule of law to the financial aids;
• and there are messages indicating that “Brussels” wants to punish the two states for differences of opinion on migration, sovereignty and gender issues – even though mechanism in question does not address any of these.

Additionally, in line with the Polish-Hungarian interpretation that considers implementing the mechanism to be an amendment to the Treaties, the two countries insist that the final decision must be made unanimously, so Poland and Hungary cannot be bypassed. However, the leading political groups in the European Parliament have stated that they will only pass the budget once the rule of law mechanism has been adopted.

However, a possible plan B could further reduce the chances of the – as of yet – merely political veto going through. A statement by Johannes Hahn, the European Commissioner for Budgetary Issues, may indicate the adoption of the recovery fund in another form without Poland and Hungary while stressing that the rejection of the budget would hit the Polish and Hungarian people the hardest.

The financial stakes of the current stand-off between Hungary, Poland, and the 25 other member states of the EU are quite high: the seven-year budget and the recovery fund add up to 1.85 trillion euros, and southern EU Member States would need the funds made available by the NextGen EU package as soon as possible due to the devastating social and economic effects of the pandemic. Hungary would also lose significant sums, as the country would be looking at 5760 billion forints (~€16 million) from the recovery fund, of which 2800 billion (~€7.8 million) would be non-repayable grants. The draft of the 2021 budget passed on Friday, but this agreement can only enter into force if the EU’s seven-year financial framework also goes through. Otherwise, the new budget would follow the 'provisional twelfths' rule: no more than one-twelfth of the budget for the previous year can be spent each month. That is still a significant amount of money, but approximately 30 billion euros less than planned.

Sanctions for breaches of the rule of law have long been discussed in Brussels, as some western Member States cannot hold their horses any longer, seeing the Polish and Hungarian governments aggressively expanding their political power and curbing judicial independence while enjoying the benefits of EU aids. The next round of negotiations is expected to take place at the EU Leaders’ Summit on 10-11 December, but considering the position of the two heads of government, their resistance is not primarily against the merits of the rule of law regulation but instead, serves their long-term strategic goals within the EU.

(This is an edited translation of a Hungarian article published by Telex on 5 December 2020, contributed by Boglárka Boros.)