EP insists on rule of law in Hungary
At Tuesday's meeting of the European Parliament’s Budget and Budget Control Committees, the resolution was voted through 38 to 8, indicating that the EP will not let the issue go and will represent its position in inter-institutional talks.
The European Commission published its draft budget for the 2021-2027 period in May, which included a proposal to make budget allocations conditional on member states’ respect for the rule of law. Under the proposal, EU transfers could be limited or even suspended should these principles be violated, preferably in a manner that would not harm the projects of beneficiaries (most likely through direct payments circumventing national governments).
The European Parliament then adopted this position and made its own statement this April in defence of the EU budget. This included a passage about cases when a "deficiency as regards the rule of law in a Member State affects or risks affecting the principles of sound financial management or the protection of the financial interests of the Union", in particular
the proper functioning of the authorities of that Member State implementing the Union budget, in particular in the context of public procurement or grant procedures.
It is worth noting that as the commission's replies to the EP committees' questions revealed, Hungary has accepted some HUF 700 bn worth of penalties, most of which had to do with the large grant package regarding supervision over the system of public procurements.
The debate about the rule of law will now continue in inter-institutional talks, with the EC and the EP having made their positions clear, while the Council of the EU, which comprises member states, has yet to reach to a consensus. The current Finnish presidency is pushing the issue and it will be put to leaders of member states at the upcoming EU summit in December, while Hungary has repeatedly indicated that it sees no need for such a regulation as there are already mechanisms in place to deal with the issue (such as the rule of law proceedings under Article 7, which have not led anywhere beyond a formal hearing in over a year).
The Council needs to adopt an unanimous stance on the rule of law, so if no agreement is reached and a member state uses a veto, the EU will not have a budget to implement.
