Top European Court Rules in Favor of Suspending Funding for Rule of Law Violations

The European Court of Justice, the highest legal entity in Europe, delivered the verdict that EU member states can have funding suspended for rule of law violations. Poland and Hungary appear as likely targets of this legislation. Photo: Arne Immanuel B’nsch/ Associated Press, via New York Times

The European Court of Justice ruled on Wednesday, Feb. 16 that it is within the right of the European Union to suspend funds to member states for rule of law violations. This decision dismisses a lawsuit posed by Hungary and Poland against the 27-nation bloc and the sanctions proposed against the two countries in response to their continuous violations of EU regulations. There will be no opportunity for their governments to appeal this ruling.

For a suspension of a country’s individual management of subsidies to take place, it will need to be set in motion by the European Commission. The decision must be agreed upon by at least 15 out of 27 EU member states. Ursula von der Leyen, the commission’s president, praised the verdict, saying, “Today’s judgements confirm that we are on the right track.” 

The court’s ruling was met with anger from officials in both Hungary and Poland. Hungarian Minister of Justice Judit Varga accused Brussel’s of abusing its power in a Facebook post, while Polish Deputy Minister of Justice Sebastian Kaleta took to Twitter to express his thoughts, calling the move by the European Union “blackmail.” Wednesday’s ruling is not the first warning of its kind to misbehaving member states, however the European Union has already frozen billions of Euros worth of pandemic recovery funds from both Hungary and Poland, and this ruling has the potential of further delaying payments.

The issue of democratic backsliding in the two eastern member states has been a repeated concern for the European Union over the years, with a large sum of EU funding being poured into the region to help stimulate the economies of the formerly communist countries. Hungary and Poland initially blocked a 2021-2027 proposed budget of the European Union on the basis of a clause tying funding to a country’s adherence to the rule of law - an apparent refusal to be bound by the central tenets of EU membership. Both countries have been accused of attempting to undermine democratic institutions and practices, by inhibiting a free press, silencing political opposition, and refusing to appoint independent judges.

Polish Prime Minister Mateusz Morawiecki (left) and Hungarian Prime Minister Viktor Orbán head the right-wing governments of their respective countries, and have been at the face of controversy with the European Union in recent years. Photo: AP, via Financial Times

Poland and Hungary are beneficiaries of sizable portions of the EU budget. In the 2014-2020 budget, Poland received the most funds out of any of the then 28 member states, receiving 104 billion euros. Both countries are eligible for even larger sums in the 2021-2027 budget, but this is contingent on their compliance with EU rule of law regulations, as indicated by the ruling on Feb. 16. The European Court of Justice reiterated the reasoning for their decision, saying, “The sound financial management of the Union budget and the financial interests of the Union may be seriously compromised by breaches of the principles of the rule of law committed in a member state.”

Wednesday’s decision also comes at a critical moment in the world of European affairs; Hungarian national elections are just weeks away, and the turbulent situation with Ukraine and Russia further to the East underscores the importance of a unified Western bloc. The positioning of Hungary and Poland as two countries making up the EU’s eastern frontier, as well as the fact that they each share a border with Ukraine, underlines their importance to the union. 

The cooperation between the European Union and Hungary and Poland has implications reaching far beyond the tens of billions of euros in funding that hang in the balance. The internal cohesion and international standing of the bloc remain at stake if its members are unwilling to uphold its foundational principles, standards of democracy, and rule of law.