As Martin Sandbu has argued for the Financial Times, this joint veto should not overshadow the progress the EU has made throughout the past year – not least, the Recovery Fund and the rule of law conditionality mechanism themselves. Yet faced with its latest setback, and notwithstanding the predictable outrage shown by Brussels’ usual dramatis personae - including Ursula von der Leyen, Manfred Weber or Věra Jourová, who have recited their litany of ’condemnations’ and ’firm commitments’ to protecting the rule of law - the Union would do well in learning from its past mistakes. Three such lessons are worth highlighting.
Rethinking the Copenhagen criteria
Hungary and Poland’s veto threat cannot be properly analysed without understanding the democratic backsliding which Central and Eastern Europe (CEE) has witnessed throughout the past decade: as this author has previously argued, it is but a further consequence of what Daniel Kelemen has labeled the Union’s “authoritarian equilibrium”. Yet the veto also speaks volumes about a past failure of the European institutions which has, thus far, gone largely unnoticed: the implementation of the Copenhagen criteria during the 2004 enlargement, which saw ten Central and Eastern European countries accede to the Union. [1]
In 1993, two years after the dissolution of the Warsaw Pact, the European Council met to discuss the EU’s next enlargement. In its Presidency conclusions, it noted that membership of the Union would require “that [the] candidate country has achieved stability of institutions guaranteeing democracy, the rule of law, human rights, [and] respect for and protection of minorities”. Following the enaction of the Lisbon Treaty, said criteria – which also included “a functioning market economy”, “the ability to cope with competitive pressure”, and “the ability to take on the obligations of membership” – were codified into Article 49 of the Treaty on European Union (TEU). Accession to the EU, in other words, would be conditional on a series of institutional guarantees, carefully scrutinised and monitored by the European institutions, to ensure new members’ adherence to the Union’s ’founding values’: freedom, democracy and the rule of law (Article 2 TEU).
Said scrutiny, however, was not to be: the accession of ten Member States – most of which had recently embarked on a transition away from communism –, was debated, negotiated and approved in significantly less time than those of the 1970s (Ireland, Denmark and the United Kingdom) and 1980s (Spain, Greece and Portugal). As Dimitry Kochenov extensively argues in EU Enlargement and the Failure of Conditionality (Kluwer, 2008), the institutions failed to apply the criteria exhaustively. Despite the conditionality regime’s “admirable” nature, and notwithstanding the Copenhagen criteria’s “huge potential”, many of the individual sub-indicators proved difficult to quantify and monitor, and the the political pressure to see the enlargement through compromised their effectiveness. What was meant to facilitate an exhaustive assessment of the candidate countries’ institutional robustness, therefore, was reduced to a superficial box-ticking exercise, and the conditionality mechanism turned out to be a “resounding failure”.
There is a plausible case to be made that many of the institutional problems which CEE has witnessed throughout the last decade can be traced to this negotiation, and to the EU’s inability to see through the conditionality it had agreed on. Faced with a future enlargement, which will likely include North Macedonia and Albania, the Copenhagen criteria will have to be rethought, to ensure their more effective application and to prevent the Union from being held hostage by its own Member States.
Financial politics
Viktor Orbán, writes Bernardo de Miguel for El País, has always been a highly pragmatic politician – both in running his domestic affairs and when engaging in his year-long crusade against the Union. It is thus highly likely that that the institutions will call his bluff, that his veto will be overcome, and that realpolitik will, once again, win the day.
Part of Orbán’s success, de Miguel adds, is owed to the unfailing protection he has been afforded by his political family, the European People’s Party (EPP). In the Commission and the Council, it has been the tacit support from his allies – most notably, Angela Merkel and Ursula von der Leyen’s CDU – which has protected Hungary from being subject to the Article 7 TEU’s sanctioning mechanism. In the Parliament, the divisions within the EPP have prevented Fidesz from being expelled from the conservatives’ parliamentary party.
Said protection, write Daniel Kelemen and Laurent Pech, has always formed part of a broader quid pro quo: in essence, it is a political reward in exchange for Orbán’s partisan loyalty – and thus his votes – both in the Parliament and in the Council. Blocking the Recovery Fund - Merkel’s flagship project, and a vital source of financial security for Member States which find themselves in the midst of the second Covid-19 wave -, could result in the loss of said support, turning Orbán into a pariah and exposing his country to an unprecedented institutional backlash.
There exist, furthermore, economic reasons to question the veto’s seriousness. Poland was the country which benefitted most from the 2014-2020 structural funds, whereas Hungary depends on the EU to fund 95% of its public investments. Once the Council has approved the Recovery Fund, and veto would torpedo the financial package, forcing the institutions to re-negotiate the framework and hindering both governments’ access to tens of billions of euros. In light of this, de Miguel concludes, it is hard to envisage Orbán sacrificing the 38 billion euros he would be entitled to under the Multiannual Financial Framework 2021-27.
A treaty to rule them all
If the Rule of Law Mechanism’s failure has taught us anything, it is that the European institutions must act decisively, not letting themselves be intimidated by the Member States. To a large extent, therefore, the success of the Hungarian and Polish veto will depend on the political will of three fundamental actors: Angela Merkel, Ursula von der Leyen and the European People’s Party. A lukewarm response - or a willingness to engage in further negotiations to limit the scope of the conditionality mechanism’s application -, might solve the Recovery Fund crisis in the short run, but it will empty the rule of law instrument of any meaning, perpetuate the Union’s “authoritarian equilibrium”, and constitute to a decisive political victory for Orbán.
Political pressure from the European capitals will play a key role in responding to Hungary and Poland’s veto. Yet the time has come for the Union to overcome, once and for all, the Treaties’ rigidity.
An intergovernmental agreement, such as that drafted to establish the European Stability Mechanism, could break the current impasse. A creature of international law, said international treaty would be binding on its signatories, but not subject to the EU Treaties’ unanimity restrictions. It would allow the remaining 25 Member States to set up the Recovery Fund, would incorporate the rule of law conditionality mechanism, and would send an unequivocal message: that the Union will not tolerate the blackmail of Viktor Orbán and Mateusz Morawiecki. It would show, in other words, that Article 2 TEU is more than a mere wish list, and that the EU takes its founding values seriously. At stake are 1.8 trillion euros, the financial stability of many a Member State, and the European Union’s very survival.
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