What EU leaders really decided on rule of law

Whether Hungary and Poland can be held to account will depend on how EU summit conclusions are interpreted.

By Daniel Hegedüs
Jul 21, 2020

After four days and nights of heated negotiations over EU spending in the wake of the coronavirus, European leaders nearly fell over themselves to declare victory. Italian Prime Minister Giuseppe Conte heralded the more than €200 billion his country will receive under the €750 billion coronavirus recovery fund. Dutch Prime Minister Mark Rutte touted the discounts the Netherlands will enjoy when it comes time to pay into the EU’s next seven-year budget.

Those quick to celebrate also included two leaders whose governments have been accused by Brussels of taking an authoritarian bent: Polish Prime Minister Mateusz Morawiecki and Hungarian Prime Minister Viktor Orbán. The two men raced to declare in a joint press conference that they had successfully warded off efforts to cut of disbursements under the budget to governments that have been found to violate the rule of law.

Not so fast. Whatever Budapest and Warsaw would like to believe, the European Council conclusion signed by the 27 leaders contains clear language tying the distribution of EU resources to compliance with the rule of law. Whether Orbán and Morawiecki were right to declare victory will depend in no small part on how that language is interpreted in Brussels and other national capitals.

Everyone claiming victory in the aftermath of an EU summit is, to be sure, business as usual. That’s the result of the unanimity needed for many decisions in the Council. A leader who can’t declare victory will face uncomfortable questions back home about why they gave consent to a deal their country can’t celebrate.

But this time, something is different. The wording on the rule of law is (deliberately?) enigmatic and vague — enough so, that it allows very different interpretations of how the conditionality will be implemented.

“A regime of conditionality to protect the budget and Next Generation EU [the €750 billion recovery fund] will be introduced,” the conclusions read. “In this context, the Commission will propose measures in case of breaches for adoption by the Council by qualified majority.” 

“The European Council will revert rapidly to the matter,” it adds later.

That language can be read in various ways, depending on how it relates to a 2018 proposal by the European Commission linking the distribution of EU funds to the rule of law.

Not so fast. Whatever Budapest and Warsaw would like to believe, the European Council conclusion signed by the 27 leaders contains clear language tying the distribution of EU resources to compliance with the rule of law. Whether Orbán and Morawiecki were right to declare victory will depend in no small part on how that language is interpreted in Brussels and other national capitals.

Everyone claiming victory in the aftermath of an EU summit is, to be sure, business as usual. That’s the result of the unanimity needed for many decisions in the Council. A leader who can’t declare victory will face uncomfortable questions back home about why they gave consent to a deal their country can’t celebrate.

But this time, something is different. The wording on the rule of law is (deliberately?) enigmatic and vague — enough so, that it allows very different interpretations of how the conditionality will be implemented.

“A regime of conditionality to protect the budget and Next Generation EU [the €750 billion recovery fund] will be introduced,” the conclusions read. “In this context, the Commission will propose measures in case of breaches for adoption by the Council by qualified majority.” 

“The European Council will revert rapidly to the matter,” it adds later.

That language can be read in various ways, depending on how it relates to a 2018 proposal by the European Commission linking the distribution of EU funds to the rule of law.

If that proposal were to be adopted, the Commission would be empowered to refer violations to the Council, which would impose sanctions unless the accused country could muster a qualified majority of votes to block their imposition.

The first interpretation is the one being touted by Orbán and Morawiecki: that any linking of EU funds and the rule of law remains a matter for European leaders in the Council, which generally operates by consensus. This would mean the end of any form of conditionality on the rule law, which is why the two men are celebrating.

That reading is almost certainly false, as any change from the conclusions would require unanimity — and the conclusions include language on conditionality.

But there’s a second reading that’s also favorable to the governments in Poland and Hungary. In this interpretation, the language on conditionality refers to an idea floated by European Council President Charles Michel in the lead up to the summit. It would modify the Commission’s 2018 proposal so that it would require a qualified majority to impose sanctions, rather than block them.

This would be an improvement over existing rules, but it would still be a mostly symbolic, hardly workable mechanism that will cause few headaches in Budapest and Warsaw.

Finally, there’s also an interpretation that would give Orbán and Morawiecki cause to worry. In this reading, the European Council opened a door to decide with a qualified majority instead of unanimity on the Commission’s 2018 proposal.  

If this last reading is correct, would mean that neither Orbán and Morawiecki got what they wanted and ultimately were only satisfied with face-saving language. Conditionality could become law in the fall, when the EU institutions meet to hammer out the details on implementing the seven-year budget.

This process, it’s fair to say, resembles a poker game rather than a transparent legislative process. And the stakes could not be higher.

If EU leaders are committed to rule of law, European Council President Charles Michel and the German Council presidency would be well advised if they did everything to support the final interpretation. They should relegate as much detail of the rule of law conditionality as possible to be adopted by qualified majority, depriving Hungary and Poland from the possibility of a potential future veto.

Quite a lot depends on them being able to do that — especially given that German Chancellor Angela Merkel’s has announced she intends to bring an Article 7 procedure about violations to the rule of law in Hungary to a close by the end of the year.

If that announcement turns out to be enough to convince the Hungarian government not to block meaningful conditionality on the rule of law, that will be good news for EU governance. Doubly so, if the Article 7 process continues to move forward due to the lack of advance on the rule of law in Hungary.

If instead, the German chancellor has forged a deal with Orbán that not only lets Hungary off the hook, but also results in weak and only symbolic conditionality, July 21 may very well go down in history as a black day for the rule of law in Europe.