Poland may receive billions of euros from the EU. No preconditions

Poland is currently negotiating the REPowerEU program with Brussels, which will formally become a new chapter of the National Reconstruction Plan (KPO). This is about additional money for energy policy, which the EU agreed in response to the shocks associated with the rapid independence from raw materials from Russia. On August 31, Mateusz Morawiecki’s government submitted its draft REPowerEU allocation to the European Commission with an application for EUR 25.76 billion, which consists of EUR 23 billion of cheap loans (the rest of the loans due to Poland from the Reconstruction Fund) and EUR 2.76 billion of subsidies distributed according to top-down EU key between EU countries from the additional pool of REPowerEU subsidies.

– The Regulation on the Reconstruction Fund does not make advance payments dependent on meeting the so-called “super milestones”, confirms the European Commission. In the case of Poland, “superstones” are conditions for the rule of law. Approval of the Polish chapter of REPowerEU would therefore give Poland the right to 20%. advance payment, i.e. up to over EUR 5 billion without any preliminary conditions. When? The Polish application for REPowerEU was submitted almost at the last minute – on August 31, Hungary, Greece and Croatia also submitted their documents, and on the last possible day, i.e. September 1, Cyprus submitted its project (Germany withdrew from the REPowerEU chapter). The same deadline applies to all of them – if the European Commission does not give its green light by the end of December, and if the decision is not approved by the EU Council (ministers of EU countries), the money will be lost.

In recent weeks, the European Commission has asked Warsaw to make significant corrections to REPowerEU (changing projects in negotiations with Brussels is standard practice, but for now it is difficult to assess how large the corrections are compared to other EU countries). However, Brussels – regardless of who will govern Poland at that time – is determined to approve the Polish REPowerEU on time, i.e. before the end of this year (as in the case of other EU countries). The last regular meeting of EU finance ministers will take place on December 7, but programs from the Reconstruction Fund have already been approved at ad hoc teleconferences of the EU Council.

The advance payment will not be paid immediately in December. The European Commission has up to two months from fulfilling its legal obligations (concluding a “financing agreement” with Poland), which means that the first tranche would be paid in the first quarter of 2024. And the rest of the advance payment from REPowerEU could be received before mid-2024, although theoretically the European Commission has as long as twelve months to make this payment. – I don’t expect the Commission to want to delay this advance payment for Poland now. It will be the opposite. Especially considering the KPO problem [bez REPowerEU] cannot be solved so quickly, says one of the EU diplomats in Brussels.

What about KPO money?

If Morawiecki’s government negotiated the content of the Polish KPO (EUR 22.5 billion in subsidies and EUR 11.5 billion in cheap loans) with the European Commission before the end of 2021, Poland – without preliminary rule of law conditions – would receive 13%. KPO in the form of an advance payment. However, this right to pre-financing has been lost in Poland, and all payments from the KPO are still blocked by “super milestones” related to the justice system.

The European Commission admits that a large part of these conditions (more modest than the requirements of the CJEU judgments) were met by the judicial act in force since July 2022 and proposed by President Andrzej Duda. However, the missing minimum, which the Commission defined in talks with Poland in the autumn of 2022, is the full right of judges to conduct a test of the independence of another judge – in accordance with EU law – i.e. to examine independence ex officio. And also, although this was in the background, ensuring judges had access to an independent court in their disciplinary proceedings. These two missing elements were introduced by the draft act, initially and informally agreed with the European Commission in December 2022 (the Supreme Administrative Court was to become the “independent disciplinary court”). However, this project got stuck in the controversial Constitutional Tribunal, where President Duda sent it.

If the president does not veto – tailored, among others, to the requirements of Brussels – the rule of law projects of the new government, the first payments from the KPO would probably take place in the first quarter of 2024. As one of our interlocutors in Brussels points out, Duda’s own judicial project from 2022 was at one stage of legislative work very close to the requirements of the KPO, but under pressure from Minister Zbigniew Ziobro’s environment, ideas enabling a full judicial independence test were cut in practice.

If Duda obstructs legislative changes, the path to money from the KPO will be longer. Renegotiating the rule of law conditions with the KPO seems extremely complicated, because it would mean the Commission losing credibility in safeguarding the rule of law in the EU, including giving up enforcing CJEU judgments. Therefore, our interlocutors in Brussels focus mainly on considering how to achieve – perhaps in a legally indirect way – the fulfillment of the requirements currently included in the Polish KPO. They expect that this would happen in the context of a broader process of healing the rule of law in Poland, which would also include issues of the National Council of the Judiciary or the Constitutional Tribunal – not covered by the KPO requirements.

The final deadline for payments from KPO is 2026 (then the money will be lost), but by the end of 2022 – under penalty of forfeiture – 70 percent was due. include KPOs in “legally binding obligations” (Poland has done this). And the remaining 30 percent The KPO must be programmed in the same way by the end of this year. There are no signs that Poland will have any problems with this. Therefore, for now, KPO funds are not at risk.

It’s easier with cohesion policy

Currently, Poland also does not have access to payments from cohesion policy, in which the Polish pool is EUR 76.5 billion in the 2021-27 budget (with the right to send invoices until the end of 2029). Only about one billion euros were paid to Poland for pre-financing and technical assistance in the development of cohesion policy projects 2021-27. The reason for the difficulties is the required system for monitoring the Charter of Fundamental Rights in projects financed by EU funds. The Polish government did not formally present any project for this monitoring to Brussels, so the European Commission could not evaluate it either positively or negatively.

Initially, the issue of the Charter focused on minority rights, including LGBT+. However, later there was a political connection with the rule of law problems of the KPO, although the European Commission never officially declared clearly what this was about.

Less than 3% has been paid so far across the EU. from cohesion policy 2021-27, because by the end of this year EU countries will spend the rest of the money from the previous seven-year plan (2014-20). The first major payments under the current seven-year plan, also in the case of Poland, should only occur in the coming months. And it seems that Brussels, together with the new Polish government, will solve the issue of monitoring the Charter of Fundamental Rights on time, for which it has never attached any hard and official conditions.