Rule of Law: MEPs demand Commission immediately applies budget conditionality

MEPs are threatening court action against the European Commission over its failure to properly implement rule of law conditionality to EU budget disbursements. MEPs also say the situation in ‘some member states’ warrants the launch of immediate investigations

In what could be a harbinger of things to come for Malta, the European Parliament’s Budget and Budgetary Control Committees this week admonished the European Commission for failing to apply the rule of law conditionality to member states seen flouting the rule of law at home.

Under the new EU rules, EU budget payments can be withheld from member states where it is established that rule of law breaches have compromised the proper management of the EU funds. As such, the new conditionality regime makes any disbursements of EU funds to member states conditional on the state of their respective rule of law. EU funds for Hungary, Poland, the Czech Republic and Malta are believed to be in the crosshairs and face the prospect of EU funding cuts over their rule of law breaches.

The rule of law conditionality, however, requires that breaches must affect or seriously risk affecting the sound financial management of the Union budget or the protection of the financial interests of the Union in a sufficiently direct way.

The European Commission, however, appears rather reticent about throwing the book at member states, and the European Parliament has taken serious issue over its inaction.

On Thursday, MEPs on the committees ruled that the budget conditionality regulation does not require any additional clarification to be applied, and rule of law breaches must be addressed by the Commission without delay.

In the resolution adopted by the Budget and Budgetary Control committees with 53 votes in favour, 11 against and two abstentions, MEPs regretted that the Commission has, instead of taking concrete action against infringing member states, decided to abide by the non-binding December 2020 European Council conclusions and delay the application of the regulation.

MEPs have further demanded that the guidelines cannot alter, expand or restrict the scope of the budget conditionality regulation and that, in order to add any value, they must clarify how the legislative provisions will be applied in practice, outlining the procedure, definitions and methodology.

The committee MEPs, on which no Maltese MEPs sit, also called on the Commission to set out a “clear, precise and user-friendly system” for submitting complaints under the regulation.

"We are now one step closer to finally applying the Conditionality regulation against those breaking the Rule of Law in the member states. With the Parliament's contribution to the guidelines, we offer the Commission the means and tools to act without hesitation. The regulation is ready to be used,” co-rapporteur Petri Sarvamaa (EPP, FI) said in the wake of Thursday’s vote.

Co-rapporteur Eider Gardiazabal Rubial (S&D, ES) added, “We have said from the beginning that the guidelines were not necessary, but the Commission put forward its proposal and asked the EP for its position. So here it is. Parliament is always ready to work with the Commission on the rule of law, and in turn, we expect the European Commission not to deceive us. It must act swiftly and strongly.”

The budget conditionality regulation is the only piece of EU legislation linking the respect of the rule of law to access to EU funds. It entered into force on 1 January 2021.

However, no measures under the new law have been proposed as yet. The European Council asked the Commission to delay the application of the regulation while member states challenge it in the EU Court of Justice, as Poland and Hungary had done, and until the Commission had developed specific application guidelines.

In a resolution adopted in March 2021, however, Parliament said that the application of the new regulation cannot be subject to any guidelines. Parliament’s position has not budged.

Address rule of law breaches ‘without delay’

Taking the Commission’s inaction to task, MEPs called on the Commission to swiftly investigate any potential breaches of the principles of the rule of law “that affect or seriously risk affecting the sound financial management of the Union budget”, by pointing out that “the situation in some member states already warrants immediate action”, without naming any names.

The Commission, MEPs demanded, should report to Parliament on the first cases under investigation by October 2021 at the latest.

Should the Commission fail to act, MEPs have warned that the European Parliament will take action against the Commission in the European Court of Justice.

The Committees’ resolution will be put to a full vote by MEPs during next week’s plenary session being over the course of next week.

Ewropej Funded by the European Union

This article is part of a content series called Ewropej. This is a multi-newsroom initiative part-funded by the European Parliament to bring the work of the EP closer to the citizens of Malta and keep them informed about matters that affect their daily lives. This article reflects only the author’s view. The European Parliament is not responsible for any use that may be made of the information it contains.

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