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What do Poland and Hungary want to veto? How much money is at stake?

The budget negotiated during the four-day EU summit in July for the next seven years is worth 1.074 trillion EUR. On top of this, there is also the Recovery Fund worth 750 billion EUR, which is intended to help EU economies get back on their feet after the coronavirus pandemic.

However, the negotiated compromise must be translated into legal language, that is to say into regulatory provisions which must be approved by the European Parliament and by the Member States.  

The July summit also greenlit the creation of a mechanism for linking payments from the EU budget to the rule of law. Right now, Poland and Hungary are opposed to this, and decided to use the threat of a veto.

What happened on Monday? Was the veto finally declared?

No. In formal terms, Warsaw and Budapest only presented their position at the meeting of EU ambassadors. In these circumstances, it was merely an opinion poll, aimed at verifying whether or not the decisions of the Council will gain the approval from a majority of Member States.

On Monday, the German presidency stated that a majority is needed for the adoption of a regulation enabling funds to be cut in the event of violations of the rule of law. In response, the ambassadors of Poland and Hungary, announced that they wanted to block the regulations needed to adopt the seven-year EU budget and the Reconstruction Fund.

The presidency will continue to negotiate in order to break the deadlock. The German government hopes to obtain the approval of all EU member states concerning both the budget and the Recovery Fund already in December. In legislative terms, nothing has changed.  

Are Poland and Hungary justified in their fear of a mechanism conditioning the disbursement of EU funds on the respect of the rule of law?

The mechanism is to be activated at the request of the European Commission, supported by 15 countries, when there is a serious breach of the rule of law, which has a direct impact on the mismanagement of EU funds.  

In the case of Poland, this tool is rather only intended to deter further changes in the justice system. So far - although the case of attacks on the independent judiciary has been censored for years - the Union has not seen any problems in the management of its funds. This is different in Hungary, where corruption in the distribution of EU funds is a serious problem.  

However, the decision to activate the mechanism will depend on the President of the European Commission, Ursula von der Leyen. Will she dare to do so in the future? We do not know.

How do the diplomats in Brussels react to the fact that the main proponent of the Polish veto is not Prime Minister Mateusz Morawiecki, but the Minister of Justice Zbigniew Ziobro?

EU diplomats and officials dealing with Poland have been wondering for a long time who makes the decisions: Morawiecki, Ziobro or Kaczyński. Brussels hopes that Ziobro will lose in the internal games in Poland. Just as he lost in July, during the budget summit, when it was his camp that called for vetoes. At that time, however, Morawiecki did not listen to him.  

Will the Union give in to pressure and accept the demands of Poland and Hungary?

The current, vague form of the regulation making the payment of funds conditional on respect for the rule of law is already a concession. It is difficult to imagine other member states taking another step back.

The governments and parliaments of countries such as the Netherlands, Sweden, Denmark and Finland have announced that they will not agree to a budget without the rule of law mechanism. It is therefore impossible to delete it, because they will veto it.

The most likely scenario is that the German presidency will try to add to the proposal a declaration from the Council or the Commission, which would ensure that the mechanism is not biased, or - as Hungarian Prime Minister Viktor Orbán wants - employed according to the recommendations from EU institutions (instead of, for example, from the Venice Commission of the Council of Europe). This would allow Orbán or Morawiecki to declare victory in their countries, but it would not change much the mechanism itself.

The same has been done during the negotiation and ratification of the Lisbon Treaty.

What countries can Poland count on in this conflict?

Nobody is eager to support Poland. It's a “two countries versus the rest“ kind of the dispute. What is more, “the rest“ is impatient as it awaits the disbursement of the negotiated money, especially from the Recovery Fund.

When will the final decisions be made?

In December. A decision on the new budget must be taken by the end of the year.

Law and Justice politicians argue that the veto will not have serious financial consequences for Poland. Is this correct? 

It is not true. A lack of a budget will mean the first ever activation of a provisional budget. The EU will manage to deal with it for some time, however, Poland will get less money. Besides, in this case there will be no Recovery Fund. The other EU countries can sign an intergovernmental agreement without Poland and distribute the money among themselves. In this scenario, we would lose at least EUR 27 billion.  

The Polish Government is sending out signals that it wants to wait for the Slovenian Presidency, which will be more sympathetic or forgiving to Poland. Will this tactic be successful?

This needs to be seen mostly as paying lip service to the Polish public opinion. Assuming that Slovenia will manage to do what Germany was unable to do during its presidency is a pipe dream. Even if the next presidency acts towards Poland with goodwill, the resistance of countries such as the Netherlands, Sweden, Denmark or Finland is not going anywhere.

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