Linking funds to respect for rule of law approved by EU court

The European Union’s highest court concluded on Wednesday that the 27-nation union can link financial support for member nations to rule of law compliance, and that Hungary and Poland’s petition should be dismissed.

Both countries’ right-wing governments maintained that such conduct lacked a legitimate legal basis. Both states, significant consumers of EU funds, have come under increased scrutiny in recent years for straying from Western standards of respect for democratic values in their own countries.

“The Court dismisses Hungary and Poland’s actions in their entirety,” the European Court of Justice said in a statement.

Many had accused the two countries of democratic backsliding and saw the linkage measure as the EU’s most powerful weapon in preventing a democratic legitimacy schism inside the group from growing.

When it comes to democratic principles, the court stated that “the European Union must be able to defend those values within the limits of its powers.”

The EU’s executive Commission had stated that it would wait for the verdict on Wednesday before deciding whether to withhold payments.

Both Hungary and Poland have previously rejected such logic, claiming that the court exceeded its power by establishing a new mechanism that is not stated in the EU’s own treaties. Making such a connection between money and the legislative judgments of independent member states, they claimed, amounted to blackmail from Brussels.

However, the court argued that democratic backsliding had an impact not only on politics but also on budgetary problems.

“Breach of the principles of the rule of law committed in a member state may gravely jeopardise the effective financial administration of the Union budget and the financial interests of the Union,” it stated.

For years, Poland and Hungary have been chastised in the EU for allegedly undermining judicial and media independence, among other democratic ideals. The EU had found itself powerless to influence either nation’s course, so it resorted to tying money to their adherence to democratic behaviour.

Respect for democratic rule of law norms is a guiding premise of the EU entrance criteria, and the court emphasised that once in, such standards should be adhered to.

“First, the Court states that conformity with those values cannot be reduced to an obligation that a candidate state must meet in order to enter to the European Union and may reject after accession,” it stated.