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A single veto can block the hard-earned EU budget. Hungary appears to be now playing this card in the dispute over an instrument for the distribution of funds. The consequences would be devastating.
The EU had just announced that it had finally reached a compromise in the budget negotiations for the next seven years. But now the Union faces the next crucial test amid the Corona crisis. As already announced, Hungary seems to want to block the budget decision: according to information from the dpa news agency, the country announced at a meeting of the permanent representatives of the member states that it could not accept the financial package of one billion dollars. Apparently, the reason is that a new instrument to sanction violations of the rule of law violates the agreements reached by the heads of state and government in July.
If Hungary did indeed exercise its veto, the planned aid from the European Crown of up to € 750 billion could not be launched as planned. This, in turn, could have serious economic consequences for countries like Italy. The planned EU budget foresees a volume of just under 1.1 trillion euros for the years 2021 to 2027. The negotiators of the member states and the European Parliament had been negotiating the budget since September.
Money versus rule of law
The conditionality regulation criticized by Hungary aims to make it possible to cut EU funds on a large scale if the rule of law in a member state is at risk and misuse of EU funds is threatened or is already occurring. Specifically, this could be the case, for example, if the lack of independence of the courts in a host state clearly allows or even encourages the abuse of EU funds. The governments of Hungary and Poland in particular have recently been repeatedly accused of expanding their influence in the judiciary. All attempts to persuade them to change course through political means have so far been unsuccessful. The criticism is categorically rejected from Warsaw and Budapest.
It is not yet clear whether Poland will also refuse to approve the financial package due to the planned instrument. According to information from dpa, the country’s permanent representative only announced on Wednesday night that an examination was still being carried out. Since unanimous resolutions are necessary for the core elements of the financial package, a Hungarian veto would be enough to stop implementation. On the contrary, only a qualified majority is required to adopt the cross compliance regulation. This has already been achieved when 15 EU states agree, which together represent at least 65 percent of the total population of the Union.
Time is of the essence
Currently, it is not clear how the conflict with Hungary could be resolved. It is conceivable that heads of state and government will have to address the issue at a summit. After all, it is almost impossible for the conditionality mechanism to be abandoned. In this case, EU countries like the Netherlands or the European Parliament are likely to block the financial package in protest.
At the same time, Chancellor Angela Merkel and the heads of the EU Commission and the European Parliament are pushing for the financial package to be approved quickly. Time is running out because the Corona crisis aid and budget should come into effect on January 1, according to a video conference between the head of the EU Commission, Ursula von der Leyen, with Merkel and the President of Parliament, David Sassoli.
