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Ursula von der Leyen, Viktor Orban, Mateusz Morawiecki

Can the EU Protect the Rule of Law? CEU DI Debate on the Conditionality Mechanism

The Rule of Law Conditionality Mechanism of the European Union is aimed at sanctioning rule of law violations. But can it fulfill its purpose? Didier Reynders, EU Commissioner for Justice, MEP Katalin Cseh and Professor Laurent Pech discussed how the mechanism will function in practice.

By Teodora Miljojkovic and Oliver Garner

In December 2020, the Council of the European Union and the European Parliament adopted a new Regulation creating a general mechanism on Rule of Law Conditionality. This new legislation aims to sanction rule of law violations linked to EU funds, in order to ensure effective protection of the EU budget and the interests of its end beneficiaries. On Monday 25 January, the CEU Democracy Institute together with its Review of Democracy live platform hosted a debate on the Rule of Law Conditionality Mechanism, to discuss the implications of this new tool, as well as the conditions and prospects for its prompt implementation.

This virtual event, convened by CEU Professor and Co-Director of the Democracy Institute, Laszlo Bruszt, brought together two distinguished speakers, EU Commissioner for Justice Didier Reynders and Member of the European Parliament Katalin Cseh, to present their views on rule of law conditionality, to explain how this mechanism will function in practice and to discuss the Regulation’s broader contribution to the EU’s rule of law protection efforts. The debate was moderated by Professor Laurent Pech, one of the leading voices in the ongoing rule of law discourse and a leading figure in the ‘RECONNECT: Reconciling Europe with its Citizens through Democracy and the Rule of Law’ project.

Watch the discussion:

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The debate opened with Commissioner Reynders’ remarks on the importance of explaining and debating the new rule of law conditionality mechanism, particularly through an event hosted by Central European University, “an institution known for its commitment to the EU’s fundamental values”.

A Mechanism to Protect the EU Budget

“The rule of law is one of the values on which the European Union is founded, as expressed in Article 2 TEU and it’s important to repeat this all the time” - Commissioner Didier Reynders

The rule of law principle guarantees the protection of all other values, including democracy and protection of fundamental rights, it is essential for the principle of mutual trust among Member States, and also for the functioning of the internal market. Additionally, in light of the COVID-19 pandemic, rule of law compliance has appeared to be a ‘stress-test’ for the Member States as the pandemic has highlighted the direct impact of the principle on citizens’ daily lives. As part of the post-pandemic recovery package, which aims to create a more resilient, greener and more digital Europe, the EU included two ways to protect the EU budget: so-called rule of law conditionality and the EPPO (European Public Prosecutor’s Office) which should be operational in the first semester of 2021. The rule of law conditionality mechanism will be used to restrict access to EU funds for actors whose actions constitute rule of law violations, while the EPPO’s office will finally be able to investigate, prosecute and bring to justice crimes against the EU budget, such as corruption, and serious cross-border VAT fraud. 22 states have accepted the EPPO’s jurisdiction, but Hungary and Poland are not among them.

The Commissioner emphasized that the rule of law conditionality mechanism is envisioned specifically to protect the EU budget from violations of characteristics of the rule of law, while the rule of law principle per se is protected through other EU instruments such as infringement procedures, the Article 7 TEU procedure and the annual rule of law report, adopted for the first time in 2020.

MEP Katalin Cseh welcomed the introduction of the rule of law conditionality mechanism but stressed that its relevance will depend on its implementation in practice:

“The EU has always had a variety of instruments, but the question is – how are those instruments utilized?”.

The CEU case was forwarded as a good example of the untimely use of legal instruments. The CJEU ruling came one year after the university already had to move its headquarters to Vienna. The integrity of the EU depends on how well it will use all the available instruments to stop systematic democratic backsliding, not only in Hungary and Poland, but across Europe.

Is the Commission Ready to Act?

 “If the rule of law conditionality mechanism is just another legal text for scholars to analyze, I am afraid it won’t get us very far” - MEP Katalin Cseh

The crucial question at this point, Pech noted, is whether the Commission is ready to act. Cseh also highlighted that doubts over the procedural legitimacy of the rule of law conditionality mechanism have already been raised due to the Council’s instructions to the Commission on the Regulation’s future implementation, a step which is arguably not recognized in EU law.

Commissioner Reynders assured the audience that the Council’s instructions to the Commission did not bring any substantial change in terms of substance, as the text of the Regulation remained intact after the discussion in the European Parliament. He reiterated that the Commission is ready to act, and it is already working on the guidelines and collecting evidence from the Member States. Rule of law budget conditionality officially came into force on January 1, 2021 and the Commission is already working on its implementation.  One of the key tools which will be used in that process is the rule of law report, both the first one from 2020 and the second one which the Commission is already preparing for publication in July 2021.

A further crucial rule of law issue arose during the debate – can we expect the new rule of law conditionality regulation to address the Member States’ non-compliance with rulings of the CJEU? Cseh stated that the credibility of the EU’s legal enforcement instruments is under question if Member States can simply disregard them.

Commissioner Reynders asserted that the monitoring of the Member States’ compliance with CJEU rulings deriving from infringement procedures and other litigation mechanisms takes time. The Commission is ready to act once it concludes, based on strong evidence, that a Member State is not working towards full compliance with the rule of law standards enshrined in EU law. The rule of law conditionality mechanism could be used to address non-compliance with CJEU rulings, but only if there is a clear link between the rule of law breach and the EU budget. For other circumstances, other instruments are in place. As the Commissioner noted, some of these tools have already shown good results – he claimed that the 2020 Rule of Law Report has led to significant changes in the election procedures in Malta, and also has had a positive impact in Bulgaria and Romania

A final question arises for future consideration following this timely debate –  could  rule of law budget conditionality in the EU be a game-changer in the values crisis or – as with the Article 7 procedures – will it lead to another dead end?     

Photo: European Commission, 2020 / Lukasz Kobus       
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