Poland and Hungary have lost their challenge against an EU mechanism that punishes rule-of-law violations in member states by withholding funds, according to a statement from the European Court of Justice.
The ECJ on Wednesday ruled the “mechanism was adopted on an appropriate legal basis” and dismissed the actions brought by Poland and Hungary “in their entirety”.
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Hungary and Poland blocked the EU’s 2021-2027 budget because it had a clause that tied funding to countries’ adherence to the rule of law. They eventually agreed to the plan on the condition that the European Court of Justice would review it.
The court argued that democratic backsliding had not only a political impact but also affected budgetary matters.
“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,” it said.
The decision was hotly anticipated by many who had accused the two nations of democratic backsliding and had seen the linkage measure as the EU’s most potent weapon to prevent a democratic legitimacy rift deepening within the bloc.
When it comes to democratic principles, “the European Union must be able to defend those values, within the limits of its powers”, the court said.
The EU’s executive Commission had said it would await Wednesday’s ruling before committing on whether to withhold funds.
On Wednesday, Hungary’s Minister of Justice Judit Varga said in a Facebook post that the court decision “is living evidence that Brussels is abusing its power”.
In Poland, Deputy Minister of Justice Sebastian Kaleta said on Twitter that the move amounted to “blackmail”.
“We need to defend ourselves against an attack on our sovereignty, Poland has to defend its democracy against blackmail that aims to take away our right to decide about ourselves,” he said.
“Especially, given that Poland is meant to lose funds for measures which are a standard in Spain or Germany.”
Poland and Hungary have faced criticism in the EU for years over allegations that they have been eroding judicial and media independence, among other democratic principles.
Finding itself unable to do much to alter the course of either nation, the EU turned to linking money to their adherence to democratic behaviour.
Respecting democratic rule-of-law principles is a major EU admission criterion and the court insisted that, once in, those principles should stick.
“The Court specifies, first, that compliance with those values cannot be reduced to an obligation which a candidate state must meet in order to accede to the European Union and which it may disregard after accession,” it said.
In Hungary, Prime Minister Viktor Orban has been pushing what he calls “illiberal democracy”, which his critics say amounts to stifling democracy.
In Poland, the Law and Justice Party overwhelmingly dominates government and has also increasingly faced criticism from other EU member nations.
The right-wing government has broken the nation’s own laws in order to gain political control over courts and judges.