EU Edges Towards Linking ‘Rule of Law’ to Funding For Member-States

By James Carstensen | October 1, 2019 | 6:35pm EDT
Prime Minister Antti Rinne of Finland, whose country holds the rotating E.U. presidency. (Photo by Pier Marco Tacca/Getty Images)

Berlin ( – European Union member-states are “coalescing” toward establishing a budgetary regulation that would make E.U. funding contingent on the rule of law in the 28 countries making up the bloc, Finnish Prime Minister Antti Rinne said on Monday.

“We need a balanced and legally transparent clear instrument that helps to bring the rule of law into line with the allocation of funds,” Rinne said during a press conference with Hungarian Prime Minister Viktor Orbán. “This is in everyone’s interest.”

Finland, which holds the rotating E.U. presidency, identified strengthening the rule of law as one of its key themes.

The E.U.’s current “rule of law” mechanism is Article 7 of the Treaty of the European Union. It provides for suspension of voting rights for a member-state deemed to have committed a “serious and persistent breach” of E.U. norms and values.

The European Parliament voted to trigger Article 7 against Hungary last year, citing erosion of democracy due to factors such as government control of the media and removal of independent judges. The move could lead to suspended funding.

Unlike the existing mechanisms, the proposed move would not require an illegal act to be triggered. The E.U.’s executive European Commission (E.C.) would merely need to identify general rule of law “deficiencies,” such as a decrease in judicial independence or the hindering of anti-corruption measures.

If the measure is triggered, the E.C. could suspend, reduce or restrict access to “shared E.U. funding” in a manner “proportionate to the nature, gravity and scope of the deficiencies.”

Such a decision could then only be blocked by a qualified majority of 15 member-states.

Orbán on Monday did not hide his dim view of the proposed condition, calling it a useless “political slogan” used to attack other member-states.

“The rule of law in Hungary is not a legal matter,” Orbán said. “It’s a matter of pride. Those who doubt it challenge our honor, and I strongly suggest anyone thinks twice before doing that.”

Rinne stressed after the meeting that the rule was not intended as a form of sanction, but seen as a step needed “to protect the E.U.’s budget.”

It will be discussed by the E.C. at a meeting this month, and if adopted will take effect in the next E.U. budget cycle (2021-27).

Shared funding refers to money the E.C. allocates to member-states, to directly manage themselves, for areas such as agriculture, growth, and employment. The funds comprise about 80 percent of the overall E.U. budget, which is itself mostly made up of member-states’ contributions.

Jorge Nunez, a senior research fellow at the Centre for European Policy Studies, said he understands the rule would enable the suspension of funding for areas where legal processes are suspect, for instance a corrupt or ineffective judiciary.

“The conditionality is linked to the protection of financial interests of the union,” he said. “It makes more powerful and explicit already existing requirements on the protection of the union’s interests.”

According to Anna Bradshaw, a partner at international law firm Peters & Peters Solicitors, the initiative could be viewed as a return to the E.U.’s original project of preventing the recurrence of war in Europe by creating obstacles to totalitarianism.

However, it risks further disintegration if any member-state cut off from funding choose to leave, she said.

Bradshaw pointed to some practical difficulties.

“How would assessments of the rule of law be reliably conducted, and who would be best placed to perform this function?” she asked. “How quickly can the mechanism be invoked in response to rule of law concerns and how sensitive can it be to improvements in conditions?”

French historian and lawyer Philippe Fabry said conditioning the E.U.’s funding to the honoring of the rule of law was a step toward further federalization of the bloc and legitimizing “the E.U. state.”

“More power will be given to the [E.U.] supra-court, and member-states’ courts will have less power,” Fabry said.

Estonian Foreign Minister Urmas Reinsalu said Monday not all member-states have reached agreement on the issue yet, and that Estonia’s position would depend on the final form that the proposal takes.

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