Hungary and Poland vetoed the EU budget and COVID-19 recovery package Monday in objection to a rule of law clause.
The leaders of Hungary and Poland took issue with a provision that would tie the funds to respect for democratic norms. Another provision would allow a qualified majority of EU governments to impose sanctions on other EU governments they believe are putting the rule of law and judicial independence at risk. Hungarian Prime Minister Viktor Orbán considers the terms legally vague and insists they create room for political abuses. Austrian Chancellor Sebastian Kurz says the provisions are necessary due to the sums involved. As both provisions only require the approval of a qualified majority, ambassadors were able to approve them.
However, the budget requires unanimity. The result of months of negotiations, the budget itself totals €1.1 trillion, and the recovery package involves a further €750 billion. Hungary and Poland’s vetoes are due to be discussed by European affairs ministers on Tuesday and heads of government on Thursday. Both Hungary and Poland’s governments have been accused of vetoing the budget as they currently face ongoing investigations. The investigations are focused on alleged attempts to undermine the independence of courts, media and non-governmental organizations.
If they concede, Hungary and Poland stand to lose tens of billions of euros in funding. However, so does the rest of the EU, which provides them with leverage. Even if a compromise is reached, the budget may still not pass, as the European Parliament and a group of countries led by the Netherlands wants an even stronger tie between the rule of law and the funds. If that does not happen, they may veto the budget.