Abstract
Some say that the Union is built by moving from crisis to crisis. Crises in the last decade which affected the Union and its citizens concerned, inter alia, public finance (the financial crisis, 2008), migration (2014), public health (the COVID-19 pandemic, 2020) and the rule of law crisis (2018). This paper focus on the latter. It has been noted that some Member States have been happy to receive the benefits of EU membership, specifically the financial ones, while their commitment to European values, including the rule of law (Article 2 TEU), has been lacking. Since many instruments applied by EU institutions to improve this situation have proved rather insufficient, halting transfers of EU funds to these recalcitrant Member States has been touted as the way that might solve this crisis. Accordingly, a draft regulation was put on the table that authorised the EU institutions to suspend EU funds if a Member State is found to be in breach of the rule of law. This draft aimed to make the transfer of EU funds to the Member States conditional upon their continuous respect for the rule of law (and therefore became known as ‘the rule of law conditionality’). This paper comments on this draft as first proposed by the Commission in 2018 (Proposal for a regulation of the European Parliament and of the Council on the protection of the Union budget in the event of generalized gaps in the rule of law in the Member States [COM (2018) 324 final).], amended in 2019 by the European Parliament [European Parliament legislative resolution of 4 April 2019 on the proposal for a regulation of the European Parliament and of the Council on the protection of the Union's budget in case of generalised deficiencies as regards the rule of law in the Member States (COM(2018)0324–C8-0178/2018–2018/0136(COD)); https://www.europarl.europa.eu/RegData/seance_pleniere/textes_adoptes/provisoire/2019/04-04/0349/P8_TA-PROV(2019)0349_EN.pdf. A draft version of these provisions was presented in von Bogdandy and Łacny (Suspension of EU funds for breaching the rule of law - µ a dose of tough love needed? European Policy Analysis 2020, No 2, p. 1–15, https://sieps.se/en/publications/2020/suspension-of-eu-funds/, 2020).], and finally adopted by the European Parliament and the Council as Regulation (EU, Euratom) 2020/2092 of 16 December 2020 on a general regime of conditionality for the protection of the Union budget [Hungary and Poland voted against it and it is expected that its validity will be challenged before the CJEU via an action for annulment (Article 263 TFEU).] (henceforth called ‘Regulation 2020/2092′). This Regulation, containing 29 recitals in the preamble and 10 articles, entered into force on 1 January 2021 (Article 10 Regulation 2020/2092.). In the conclusions of the European Council meeting in December 2020 it was however accepted that it will be applied only in relation to budgetary commitments starting under the new Multiannual Financial Framework (MFF) 2021–2027, including Next Generation EU [Conclusions of the European Council meeting, 10 and 11 December 2020, para I (2) (k) https://www.consilium.europa.eu/media/47296/1011-12-20-euco-conclusions-en.pdf.]. This paper provides the legal characteristics of rule of law conditionality established under Regulation 2020/2092 and aims to determine whether financial incentives can restore compliance with the rule of law in Member States. Or in other words, is it all about the money?
Highlights
The rule of law is the backbone of modern constitutional democracies and ensures that all public powers act within the constraints set out by law, in accordance with the values of democracy and fundamental rights and subject to the control of independent and impartial courts.1 This rule occupies a prominent place in EU; it is one of its core values.2 It has been stressed that the respect for the rule of law must be ensured throughout all EU policies, including EU finances,3 and this rule should be put at the heart of the EU budget.In recent years some Member States have continuously violated the rule of law
It introduces the concept of conditionality as applied in EU law so far. It presents its legal characteristics when applied to Union funds under Regulation 2020/2092. It discusses the definition of the rule of law and which types of breaches would launch the rule of law conditionality; the procedure and measures to be applied in such a situation; and the desired impact of these measures on the Member States; as well as the undesired, but possible, impact of these measures on end beneficiaries of Union funds
Rule of law conditionality has been set up as a legal mechanism allowing for the protection of the Union budget in the case of breaches of the rule of law by Member States
Summary
The rule of law is the backbone of modern constitutional democracies and ensures that all public powers act within the constraints set out by law, in accordance with the values of democracy and fundamental rights and subject to the control of independent and impartial courts. This rule occupies a prominent place in EU; it is one of its core values. It has been stressed that the respect for the rule of law must be ensured throughout all EU policies, including EU finances, and this rule should be put at the heart of the EU budget. The deep-seated belief that the EU institutions have moderate tools to sanction Member States for violating the rule of law, is hard to counter.13 In this narrative it is often claimed that it is ‘a curious omission’ that the Union does not insist more effectively on observance of the rule of law, e.g. as a condition for receiving Union funds. Doubt that the external imposition of legal and political standards and linking them to financial sanctions can result in a profound transformation of legal culture and political behaviour unless accompanied by a real commitment and support in the respective Member State.16 This latter approach, did not prevail, and in response Regulation 2020/2092, which is examined in this paper, was adopted to allow the EU institutions to make transfers of Union funds to Member States conditional on their respect of the rule of law. It discusses the definition of the rule of law and which types of breaches would launch the rule of law conditionality; the procedure and measures to be applied in such a situation; and the desired impact of these measures on the Member States; as well as the undesired, but possible, impact of these measures on end beneficiaries of Union funds (point 3)
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