The constitutional impact of rule-of-law spending conditionality

Abstract

Abstract The negotiation of an unprecedented recovery package to address the consequences of the COVID-19 pandemic provided momentum for a new instrument to condition the disbursement of EU funds to compliance with the rule-of-law principles. Regulation 2020/2092 (“the Conditionality Regulation”) was aimed at protecting the financial interests of the European Union and the sound management of EU funds against breaches of the rule of law. The aim of this article is to assess the validity, effectiveness, and broader impact of rule-of-law conditionality upon the EU constitutional architecture. The effectiveness in practice of the Conditionality Regulation is evaluated, together with the role of other conditionality mechanisms that have been used to promote rule-of-law standards, mainly the Recovery and Resilience Facility, which is the centerpiece of the NextGenerationEU package, and the Common Provisions Regulation, which includes a horizontal enabling condition that makes EU funds contingent upon the effective implementation and application of the EU Charter of Fundamental Rights. The suitability of rule-of-law conditionality as a form of governance with the current EU constitutional architecture is critically examined. Conditioning funding to promote values raises concerns from a constitutional perspective that include the risk of competence creep, repercussions for citizenship, and, finally, the undermining of trust and solidarity in interactions among member states. The Conditionality Regulation represents a relevant addition to the toolbox of instruments devised to address rule-of-law backsliding in the European Union, yet the expansion of rule-of-law conditionality could also be consequential for the ethos of the European Union.