EU money only for the law-abiding? Inspection is starting, also in Poland

– Poland was selected for this inspection because, like Hungary, it is one of the Member States against which the procedure under Art. 7 of the EU Treaty, says DW one of the EU diplomats after the European Court of Auditors announced on Monday that it was launching an audit to assess whether the Commission effectively protects the EU’s financial interests in the event of a breach of the rule of law. Specifically, the auditors will check whether money from the EU budget – mainly funds from the cohesion and reconstruction policy – in accordance with the conditionality mechanism, actually goes only to those countries that respect the rule of law.

And we are talking about considerable funds, because the EU budget for 2021-2027 is EUR 1,211 billion, of which 361 billion are cohesion policy funds. In addition, €807 billion is to be made available to Member States under the Next Generation EU package, of which €724 billion is the Recovery and Resilience Facility. The audit will be carried out in six Member States, including Bulgaria, Greece, Italy, Romania, Hungary and Poland. The choice is not accidental, because all these countries have been prosecuted for corruption, fraud when spending EU funds or, as in the case of Poland, for violation of the rule of law.

A problem for the finances of the entire EU

Meanwhile, as the ECA reminds, the rule of law is one of the fundamental values ​​of the EU enshrined in the Treaty on the Functioning of the European Union. – It means that all citizens are equal before the law, the courts are independent and impartial, and the principle of separation of powers is respected – officials say. And they add that the violation of the rule of law entails not only consequences for citizens, but also for the finances of the entire EU, because without proper supervision there is no certainty that EU funds are properly spent.

– Non-compliance with the rule of law may consist, for example, in the fact that appropriate anti-corruption measures are not taken. And in a situation where the courts are not independent, there is no control over it. This state of affairs can have serious financial consequences for the EU and lead to the misappropriation of EU money in the Member States, explains Annemie Turtelbom from the ECA, responsible for the audit.

To prevent this, the European Commission has developed a number of tools, including legal, financial and supervisory ones, to ensure the rule of law in Member States and ensure the protection of the EU budget in cases of violation of the rule of law. This includes cooperation and verification mechanism, procedures to be followed in the event of a country’s failure to fulfill its obligations or annual reports on the rule of law, showing the situation in this regard in each EU country.

Now EU auditors will check whether the EC actually uses these tools. – The task of the European Commission as guardian of the Treaties is to detect cases of possible violations of the rule of law in the Member States and to take appropriate action. The Commission has some tools at its disposal to protect the EU budget. The purpose of the audit is to assess whether it uses them effectively, especially when it comes to protecting funds allocated to cohesion policy and rebuilding the economy after the pandemic, says Annemie Turtelbom.

Hungary on censored

In 2020, the EU agreed to introduce a conditionality mechanism to protect the sound financial management of the entire EU budget. Under the “rule of law money” principle, the regulation requires that Member States’ access to EU money be suspended, reduced or restricted where “serious breaches of the rule of law are identified”. There are conditions, because in order to stop or reduce funding, the Commission must first demonstrate to the Council a link between the lack of rule of law and a threat to the financial management of the EU budget or the protection of the EU’s financial interests.

This is what happened in the case of Hungary, which is the first country to which the conditionality mechanism was applied and in mid-December last year, with the consent of the Council, the payment of 55 percent was suspended. funds that the country was to receive under the three cohesion policy programmes. The EC also wants to protect funds transferred to the Member States under the recovery fund in a similar way. Therefore, the so-called milestones, i.e. the rule of law conditions that states must meet in order to receive funds. And so the Polish KPO, i.e. EUR 22.5 billion in subsidies and EUR 12.1 billion in cheap loans, depends on ensuring the independence of the judiciary.