This trap was laid in July. Under the moderation of Germany, which holds the rotating EU presidency, the 27 national leaders tentatively agreed to a groundbreaking budget-plus-stimulus deal to address the pandemic. Worth 1.8 trillion euros ($2.1 trillion) in total, the package includes 750 billion euros to be financed by the first “European” bonds ever issued, which is why it’s considered the germ of a future fiscal union. But it still has to be accepted by the European Parliament and ratified by all member states.
To get that initial agreement, its drafters added some vague wording about conditionality. The aim was to link any receipts of EU money to upholding the rule of law. Broadly defined, this term includes everything from an independent judiciary and a free press to other basics of liberal democracy, as enshrined in the EU’s treaties. Uncontroversial, you might think.
Those phrases entered the text to give the naysayer countries a reason to support the overall package. Its critics, dubbed the “frugals,” are the Dutch, Austrians and Scandinavians, who aren’t crazy about joint borrowing and spending. So the language to tie funds to rule of law was a motivation for them to nod the deal through.
The conditionality clause’s obvious targets are Hungary, which has been dismantling democratic norms for a decade, and Poland, which has been at it for five years. The EU has no mechanism for expelling member states. But it has initiated so-called Article 7 probes into both countries, which could in theory deprive them of their voting rights in Brussels. In reality, there are so many hurdles before such an outcome that the populist regimes in Budapest and Warsaw simply ignore the proceedings.
That’s why the “frugals” and several other member states, cheered on by the European Parliament and Commission, wanted to add a new mechanism to discipline Hungary and Poland. They meant to revive a proposal from 2018, whereby the Commission could impose punishments against errant countries unless a qualified majority — usually 55% of member states representing at least 65% of the EU’s population — rejects the sanctions. Budapest and Warsaw could never have mustered that much support to veto their own censure.
A proposal this week from Germany dilutes this idea beyond recognition, however. Sanctions must now be accepted, instead of rejected, by a qualified majority. Hungary, Poland and a few eastern European allies could easily get a blocking minority.
Moreover, any proposed punishment must relate directly to transgressions that compromise the use of EU funds — if corruption sends the money to the wrong accounts, for example. A wider deterioration from democracy to autocracy, which is how the U.S. think tank Freedom House describes Hungary’s development, would no longer qualify.
It’s easy to see, if still unfortunate, why Germany would go wobbly like this. Chancellor Angela Merkel sees the next few months as her last chance to leave a positive European legacy. She needs this pandemic fund done and dusted, and can’t risk a veto by Hungary or