The 'Rule of Law' Mechanism: Does it Deepen the Union or Hit National Sovereignty?

After much celebration over its passage this summer, the European Union’s COVID-19 relief plan finds itself once again under threat, this time by Hungary and Poland whose EU ambassadors blocked the EU’s next seven year budget from achieving the unanimous support it needs to go into effect on January 1. The obstruction comes at the behest of the countries’ respective prime ministers after a new “rule-of-law” mechanism was included in the relief plan which is part of the EU’s budget. The new mechanism would give the EU Commission the ability to withhold funds from member states that are found to be undermining the rule of

law within their territory. For years now, Poland and Hungary have been accused of engaging in illiberal rollbacks of democracy; Poland’s judicial reforms were seen in Western Europe as a poorly veiled attempt to curb the independence of the country’s judiciary and Hungarian Prime Minister Viktor Orbán has been accused of limiting the freedom of the press in order to crush any dissent to his party’s virtually singular rule.

But, as with almost every issue in the European Union, the crux of this dispute is ultimately about Europe’s path towards greater political integration. Firstly, the rule-of-law mechanism was included in the relief plan because, written explicitly in its founding document, the Treaty of Maastricht of 1992, the European Union is a union of democracies and all members have to uphold the union’s democratic and republican values. But, once a state becomes a member, the bureaucracies of the EU have very few mechanisms for enforcing this democracy standard and the ones that do exist are very weak and ineffective. For example, if the EU Commission investigates a member country and finds it to be in violation of the EU’s founding principles, it can suspend that country’s voting rights in the EU contingent on a unanimous vote by all other members of the Union. The EU Commission actually has carried out investigations of Hungary and Poland’s illiberal practices, but both countries have signaled that they would protect the other making punishment of either country virtually impossible.

At least, that was the case before the EU Parliament insisted on including the rule-of-law mechanism in the COVID-19 relief plan. The EU Commission does not need an unanimous vote from the bloc to withhold funds from an errant member country; that only requires a simple majority. The rule-of-law mechanism, then, would authorize the EU Commission to exercise such discretion in distributing the bloc’s COVID-19 relief funds, all but ensuring that Hungary and Poland would finally face a bit of retribution for their anti-democratic actions. Such a move, if ultimately approved, would provide a precedent for beginning to chip away at some of the Union’s other unanimity requirements that many europhiles say unnecessarily restrain the bloc’s ability to tackle the issues facing Europe and command a greater presence on the world stage.

The EU’s many unanimity requirements have been the bane of europhiles across the continent for the better part of the last decade and a half. Opponents of unanimity argue that what made sense back in 1992 when the EU counted only twelve members no longer makes sense for a bloc of 27 countries. They argue that the Union’s many unanimity requirements have only served to hamstring the bloc’s ability to adapt to the changing world and respond in tandem to the many crises that have struck Europe since 2008. Few will deny that the requirement for unanimity (and the strict demands of the Frugal Four: Austria, the Netherlands, Denmark, and Sweden) severely limited the EU’s response to the Great Recession of 2008 and to the ensuing sovereign debt crisis. This not only meant that Europe suffered from a much slower recovery than the U.S., but also threatened to kill the euro and perhaps even the European Union itself.

Proponents of unanimity (and opponents of greater political integration) argue that the EU is not meant to be anything more than a single market and customs union. They argue that each member country has a right to their national sovereignty and to not have their policies dictated to them by Brussels. These have been the arguments pushed by the Hungarian and Polish Prime Ministers, Viktor Orbán and Mateusz Morawiecki respectively. They liken the europhilic vision of the EU to a new Soviet Union intent on centralizing power in the bloc’s bureaucracies. But, while their criticism may be extreme, Hungary and Poland are far from the only countries who prefer a more restrained EU and, up until the COVID-19 crisis, it seemed that the eurosceptics had the upper hand and always would. But, the lessons of the Eurozone crisis—and the proactive leadership of EU Commission President Ursula von der Leyen and European Central Bank President Christine Lagarde—meant that the EU’s response to the pandemic has been much more ambitious and effective and momentum has shifted to the side of the europhiles who argue that a more active and more powerful EU has alleviated Europe’s pandemic suffering. Eager to push their advantage, europhiles in the EU Parliament have stood firm on including the rule-of-law mechanism in the bloc’s coronavirus relief plan.

There are a few paths towards resolution of this dispute: either the bloc could agree to drop the rule-of-law mechanism from the budget or the bloc could pass the COVID-19 relief plan outside of the budget. Neither of these seem very likely, though, since the EU Parliament has signaled that it is unlikely to approve any plan or budget that does not include the rule-of-law mechanism. That leaves Europe in a standoff with the continent’s desperately needed stimulus and recovery plan as hostage. A week and a half into the standoff, Orbán and Morawiecki reaffirmed their commitment to blocking the plan and the rest of the bloc has shown no sign of budging either. Historically, the EU Commission has been very timid to stand up to its most stubborn members, but under the leadership of President von der Leyen, the Commission has been reinvigorated with a renewed resolve to tackle the reforms needed to strengthen the EU and, with the Parliament unwilling to cede any ground either, there seems to be little reason for President von der Leyen to give in. That being said, it is hard to imagine that the upper brass in Poland and Hungary will ever accept a mechanism that allows Brussels to sanction them without recourse. Some European diplomats are seeking to assuage Poland and Hungary’s fears by assuring that the mechanism will be rather weakly enforced, but, as it stands, there is no clear way out of this crisis. But, regardless of how the EU exits this dispute, there can be no doubt that this incident will only strengthen the europhilic argument that unanimity restrains the EU in times of crisis and must ultimately be done away with.

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