After weeks of threats, Hungary and Poland have finally made good on their promise to block ratification of the EU’s €1.8tn Covid-19 recovery package over the vexed subject of the rule of law.
On Monday afternoon, EU ambassadors representing Budapest and Warsaw opposed a decision for the EU27 to raise the so-called “own resources” ceiling that would empower Brussels to borrow hundreds of billions of euros to fund the recovery effort.
In doing so, they put the brakes on a crucial legal process that requires the unanimity of all member states. During the meeting, which officials say was “matter of fact” and lacking in animus, a senior EU diplomat warned this new delay during the resurgence of coronavirus cases risked throwing the union into a “serious crisis”.
The events were the culmination of months of talks to fill in the gaps of a deal struck by EU leaders in July that had left the details of the rule of law mechanism deliberately vague.
Since September, the German presidency of the EU has tried to assuage the concerns of Budapest and its allies that they would be the “victims” of a conditionality tool, while also addressing accusations by the European parliament and northern capitals that illiberal governments would be rewarded for riding roughshod over EU values with billions in taxpayer money.
Earlier this month, member states and the parliament struck a preliminary deal on the workings of the rule of law mechanism and the details of the EU’s €1.1tn, seven-year budget. But the grand compromise did not have a buy in from Poland and Hungary.
So what happens next? If EU leaders are to find a way out of the impasse, Hungary’s premier Viktor Orban will have to spell out exactly what his demands are. Budapest’s claim that the July deal did not authorise the creation of a rule of law mechanism is a non-starter for most member states and MEPs, who will not countenance the reopening of the rule of law legislation.
Of the available options, the least dramatic would be some reassuring language from the EU to bring Hungary and Poland on board without redrawing any of the legal text. “We can give them comforting words but nothing that changes the text,” said one diplomat. Plenty expect that even Mr Orban will not sacrifice tens of billions in aid for Hungary over the matter, which is likely to be raised at a videoconference of EU leaders on Thursday.
German chancellor Angela Merkel will play a crucial role in de-escalating the spat. Ms Merkel has spent the last decade trying to “manage” Mr Orban inside her centre-right political family, sometimes with little success. But of the EU’s senior figures, she has been the most willing to show Poland and Hungary that she is sensitive to their concerns about losing vital funds over respect for EU values.
Not everyone is in the mood for conciliation. A group of smaller countries — including the Dutch and the Nordics — are losing patience with Budapest and Warsaw. Dutch prime minister Mark Rutte earlier this year went as far as to theorise about a “European Union without Hungary and Poland”.
Some observers think the EU can and should call Mr Orban’s bluff by threatening to create a separate treaty allowing for the creation of the €750bn recovery fund — and excluding Poland and Hungary. Such creative thinking is not part of the conversation among policymakers in Brussels and is politically inconceivable for the German chancellor.
“It will now be up to the chancellor to enter into a dialogue with Hungary and Poland and come up with a formula they can accept,” said Detlef Seif, deputy spokesman for EU affairs of the CDU/CSU parliamentary group. “I’m worried we could drift into a situation where the EU’s cohesion is at risk. But if anyone has the negotiating skill to find a solution to this, it’s Merkel.”
Additional reporting by Guy Chazan in Berlin
Chart du jour: UK’s sky-high public spending
The Financial Times has published a detailed analysis of the UK’s economic woes, which shows that public spending has exploded in nominal terms compared with the fourth quarter of 2019. (chart above via FT)
The jump in UK public consumption in cash terms dwarfs increases in France and Spain for the same period. The disparity has raised questions in Westminster, with MPs questioning the Treasury’s blank cheque approach.
Europe news round-up
The EU wants to drastically increase the amount of power generated by offshore wind energy. According to a leaked European Commission draft, the bloc hopes to move from the current 23GW generated by offshore wind to 300GW by 2050. The plan to increase offshore capacity is estimated to cost €789bn and could create up to 62,000 jobs. (Euractiv)
Moldova is set to elect Maia Sandu, a former World Bank economist, as its next president. Ms Sandu has promised to tackle corruption and heal divisions in the ex-Soviet state. Russian-backed challenger Igor Dodon has “provisionally” conceded to Ms Sandu, but claimed that there had been voting irregularities in Sunday’s poll. (FT)
Apple is set for another legal battle over alleged breaches of the privacy of its users in Europe. The claim, by superstar privacy activist Max Schrems, was filed to German and Spanish data authorities to avoid involvement by the EU and sidestep “endless procedures” that have encumbered claims against Apple in Ireland. The complaint claims that the unique tracking code generated by each iPhone allows advertisers to track users between apps without their consent. Apple has denied it is breaking EU law and has branded Mr Schrems’ complaint “factually inaccurate”. (FT)
Emmanuel Macron doesn’t think the new Joe Biden administration will reverse US disengagement in Europe — and the French president argues that it’s time for Europe to think more independently. In a wide-ranging interview with Le Grand Continent, Mr Macron also hit back at claims by German defence minister Annegret Kramp-Karrenbauer that Europeans would not be able to “replace America’s crucial role as a security provider”. Mr Macron responded that the era of American defence protection is over, and said Europe would only be respected if it was “earnest” with the US.
The EU may need to portray policy with more emotion — or risk having others spin the story for them. Dr Julia De Clerck-Sachsse of the European Council on Foreign Relations argues that the union should cast off the image of the dull bureaucrat and inject some passion into its policy, or it will lose touch with citizens seduced by populists with more emotive narratives.
Coming up today
Europe ministers log in for a marathon teleconference this morning to discuss the stalled budget negotiations and a new wrinkle in accession talks with Albania and North Macedonia. Bulgaria looks set to block the process because of a difference in view with Skopje about North Macedonia’s history and language, writes Valerie Hopkins in Budapest.
The country changed its name last year after a 27-year dispute with Greece, a breakthrough that opened the way to the start of EU accession talks. Allowing Sofia to block them now would be a blow to the bloc’s enlargement process — and would send signals to other western Balkan leaders that hard reforms will not be rewarded.