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EU ready to turn up the financial heat on Poland and Hungary

EU ready to turn up the financial heat on Poland and Hungary

2 min. 12.11.2021 From our online archive
European Commission expects to send letters to Budapest and Warsaw
The European Commission building in Brussels
The European Commission building in Brussels
Photo credit: AFP

The European Union is ready to formally ask Poland and Hungary to address allegations that they have been misusing the bloc’s funds, according to officials familiar with the discussions.

The European Commission expects to send letters to Budapest and Warsaw, asking for their response to reports that funds provided by the bloc could have been subjected to corruption or fraud, said the officials, who asked not to be identified. EU Justice Commissioner Didier Reynders confirmed on Friday that the letters may be sent within days.

The letters, containing specific examples of instances when EU financial interests may have been undermined, are a first step in the so-called conditionality mechanism, a new process that could see billions of euros withheld from member states accused of rule-of-law violations. The letters will be sent as soon as Commission President Ursula von der Leyen signs off on them, officials said.

Poland and Hungary, which joined the EU in 2004, argue the mechanism was adopted in violation of the bloc’s treaties. Both face criticism for anti-democratic laws, such as a controversial regime to discipline judges in Poland and anti-LGBTQ legislation in Hungary.

The countries will be given some eight weeks to respond, the officials said. If these responses aren’t satisfactory, the EU executive would ask member states to approve sending of formal letters of notification, which would be the second stage of the procedure. 

EU authorities have been compiling examples of controversial projects since January and consider that there are enough of them to trigger the new instrument against Poland and Hungary, according to the officials.

“If anyone is aware of breaches of law (be it national or EU law) or corruption cases, should refer them to the competent authorities,” the Hungarian government said in an email.

Von der Leyen said last month that “no measures will be taken” before a ruling from the bloc’s top court on a challenge by Poland and Hungary questioning the legality of the commission’s new powers. But the commission could take the first steps under the conditionality mechanism and “send letters to ask for information or questions that are necessary to be asked,” she said at the time. The EU court’s binding ruling is expected early next year.

While the Hungarian and Polish governments will be the first ones to receive such letters, the commission intends to launch a similar procedure in the near future against some other member states. 

A visit to Budapest this week confirmed the commission’s concerns about the erosion of the rule of law, Reynders told reporters in the Hungarian capital. He called a government decision to challenge a binding EU court ruling on migration at the nation’s Constitutional Court “unacceptable” because it questioned the primacy of EU law.

Hungary also needs to change legislation Prime Minister Viktor Orban calls a “child protection law,” which the commission in Brussels says discriminates based on sexual orientation, Reynders said.

©2021 Bloomberg L.P.

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