Deal struck to allow EU to block budget payments to rogue members

Brussels will be able to block budget payments to rogue EU governments that undermine the rule of law or the independence of judges, under a hard-fought agreement between the European parliament and member states.

In what was described as the “end of a painful phase” for the EU, a provisional deal has been struck, which will allow a qualified majority of member states to impose sanctions where governments fail to maintain democratic standards.

Procedures under article 7 of the EU treaties were launched against Poland in 2017 and Hungary in 2018 over alleged attempts by the governments to undermine the independence of their judges.

But the current system requires unanimity among the member states before sanctions, such as the removal of voting rights in Brussels, can be imposed. The rightwing governments in Poland and Hungary have said they will protect each other from such measures.

Under the new mechanism, there would be greater accountability over EU payments through removal of that veto. The European commission will establish whether any principles have been violated and then propose sanctions.

A suspension of payments from the bloc’s seven-year budget and coronavirus recovery fund could be enforced in response to “breaches of the principles of the rule of law in a member state” or where governments “seriously risk affecting the sound financial management of the EU budget or the protection of the financial interests of the EU”.

EU countries would then have one month to adopt the sanctions proposed by the commission by a “qualified majority”, which means at least 15 of the 27 countries representing at least 65% of the bloc’s 450 million citizens.

The targeted member state could trigger an “emergency break” to allow an extra two months of talks over a possible compromise. But once the sanctions have been agreed they must be implemented within seven months.

“We are ending a painful phase,” said Petri Sarvamaa, the Finnish MEP who helped lead to the European parliament’s negotiators with the member states over the mechanism. “If we had left this regulation too vague, toothless, then the ship would have continued to stay off the course indefinitely. This is what happened actually … Just look at what has happened in the US in the last four years … We want to avoid that situation in Europe.”

Katalin Cseh, a Hungarian MEP in the liberal Momentum party, said the agreement would prevent the prime minister of Hungary, Viktor Orbán, and others from using the EU as a “cash machine”.

She said: “Hungary is not a functioning democracy any more. Orbán and the government will fight to the death to stop the functioning of this. But I hope we have found something to stop this kind of violation.”

The deal must now be officially endorsed by a qualified majority of the EU’s 27 member states and a majority in the parliament. But MEPs and the member states are remain in dispute over the total size of the seven-year budget and coronavirus recovery fund, in a row that threatens its timely distribution. The parliament wants to secure additional funding beyond the €1.8tn (£1.6tn) agreed by EU leaders earlier this year.

Cristian Terheş MEP, from the Romanian Christian Democratic National Peasants’ party, said the rule-of-law mechanism was an unacceptable interference by Brussels into domestic politics.

He said: “The EU is shaking a chequebook rather than a gun at the head of democratically elected governments in Poland and Hungary in order to bully them into doing Brussels’ bidding.

“This is a despicable interference in the lawful democratic decision-making of member states. States have constitutions and parliaments which need to be respected by Brussels, rather than being whipped into line like a badly behaved child.”