MEPs want rule of law conditionality investigations launched immediately

MEPs on Thursday overwhelmingly voted for rule of law conditionality investigations to be launched immediately with Hungary, Czechia, Poland and possibly Malta caught in the crosshairs.

Incensed at its inaction in the face of repeated calls from the European Parliament, MEPs have called out resistance from the European Commission on the matter.

MEPs deem related guidelines being drawn up by the Commission as ‘unnecessary’ and warn that Parliament has to prepare to sue the Commission over its ‘non-action’.

The contentious budget conditionality regulation does not require any additional clarification, MEPs have insisted and MEPs are taking the European Commission to task by insisting rule of law breaches in member states must be addressed as soon as possible.

The resolution was adopted overwhelmingly with 529 to 150 and 14 abstentions.

In the resolution, MEPs regretted that the Commission has decided to abide by the non-binding December 2020 European Council conclusions and has delayed the application of the budget conditionality regulation by developing application guidelines on its own steam, which MEPs insist are unnecessary and amount to a foot-dragging exercise.

“Again we find ourselves talking about the rule of law conditionality mechanism. But when will we finally see some action? The mechanism came into force on 1 January, and yet it hasn’t been implemented,” said co-rapporteur Eider Gardiazabal (S&D, ES) during the debate. “From the beginning we were very clear that these guidelines were not needed. We agreed on a regulation and we expect it to finally be applied.”

Under EU rules, EU budget payments can be withheld from member states where it is established that rule of law breaches have compromised the proper management of the EU funds.

As such, the new conditionality regime makes any disbursements of EU funds to member states conditional on the state of their respective rule of law. EU funds for Hungary, Poland, the Czech Republic and Malta are believed to be in the cross hairs and face the prospect of EU funding cuts over their rule of law breaches.

The rule of law conditionality, however, requires that breaches must affect or seriously risk affecting the sound financial management of the Union budget or the protection of the financial interests of the Union in a sufficiently direct way.

The budget conditionality regulation is the only piece of EU legislation linking respect of the rule of law to access to EU funds. It entered into force on 1 January 2021. However, no measures under it have been proposed yet. The European Council asked the Commission to delay the application of the regulation while member states challenge it in the EU Court of Justice (Poland and Hungary did so on 11 March 2021), and until the Commission had developed specific application guidelines.

Guidelines should not restrict the law

MEPs in plenary on Thursday stressed that the guidelines being drawn up by the Commission cannot alter, expand or restrict the text of the budget conditionality regulation.

In order to add any value, MEPs insist, the guidelines need to clarify how the legislative provisions will be applied in practice, outlining the procedure and methodology while avoiding exhaustive definitions of abstract concepts within the regulation.

They also call on the Commission to set out a “clear, precise and user-friendly system” for submitting complaints under the regulation.

Address rule of law breaches ‘without delay’

MEPs called on the Commission to quickly investigate any potential breaches of the principles of the rule of law “that affect or seriously risk affecting the sound financial management of the Union budget”, by pointing out that “the situation in some member states already warrants immediate action”.

The Commission should report to Parliament on the first cases under investigation as soon as possible, they demanded.

Parliament could take legal action against the Commission

With Parliament and the Commission at obvious loggerheads, MEPs took the Commission to task for having missed the 1 June 2021 deadline Parliament had set to apply the regulation and adopt the guidelines.

“People are worried about their liberties, minorities are suppressed, free media are shut down or bought by government oligarchs, judicial systems are party-politicised and independent judges are replaced by party loyalists. All this is done with EU money and should not be happening in Europe in 2021”, said the co-rapporteur Petri Sarvamaa (EPP, FI) in the debate ahead of the vote. “Parliament has therefore launched the legal procedure so that the Commission applies the Rule of Law conditionality regulation from autumn onwards.”

MEPs welcomed the 23 June letter from EP President David Sassoli which declared that if the Commission does not act, the EP will take action in the Court of Justice and add that the Parliament has to continue its necessary preparations under Article 265 of the Treaty on the Functioning of the European Union against the Commission for “non-action”.