Germany brokers compromise with Hungary, Poland in rule-of-law spat

Brussels/Warsaw (dpa) – Hungary and Poland are closer to dropping their veto on the European Union’s long-term budget after Germany negotiated a compromise, EU sources told dpa on Wednesday.

The remaining 24 EU countries will have still to agree to it. The provisional political agreement foresees the passing of a new declaration on a rule-of-law mechanism.

Bar Warsaw and Budapest, the EU countries seek to introduce a tool under which EU funding can be withheld when serious rule-of-law deficiencies impact the bloc’s household spending.

The two countries are strongly opposed to the tool.

Using much-needed recovery funds as leverage, Poland and Hungary have been blocking the passing of the EU budget and coronavirus recovery fund over the rule-of-law issue.

The spat risks delaying the adoption of the EU’s 1.8-trillion-euro (2.1-trillion-dollar) 2021-27 spending plan, which includes approximately 750 billion euros in coronavirus economic aid.

According to a draft of the declaration, seen by dpa, no decision to withhold funds would be made until the European Court of Justice rules on the matter if a country decides to challenge the relevant regulation.

This essentially buys Warsaw and Budapest time and delays the moment by which funds could be withheld as ECJ court cases are often lengthy.

Poland’s Deputy Prime Minister Jaroslaw Gowin on Wednesday had announced that Poland and Hungary reached an agreement with Germany, which currently holds the rotating EU Council presidency.

“An agreement has been made within the Warsaw-Berlin-Budapest triangle,” Gowin said.

Gowin said he believed the remaining 24 EU member states would also support the accord, while not providing details.

According to EU diplomats, they could sign off on the agreement on Thursday or Friday during a summit in Belgium’s capital Brussles.

If they reject the proposal, only an emergency fund will likely be available as of January.

The European Commission and member states might then also have to look for alternatives for passing the 750-billion-euro recovery fund without Poland and Hungary.

But Gowin said he was optimistic that Poland’s Prime Minister Mateusz Morawiecki would be able to negotiate a “good deal” concerning the EU budget during the upcoming EU summit on Thursday.

Hungary’s Prime Minister Viktor Orban, after holding talks with Morawiecki in Warsaw, had already indicated on Tuesday evening that he thought an agreement was possible at the upcoming EU summit.

During a first discussion on Wednesday afternoon, EU ambassadors had reacted positively to the proposal while also introducing “constructive questions,” an EU diplomat said.