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EU hit by new crisis, this time over money and values

BUDAPEST – The European Union still hasn't completely sorted out its messy post-divorce relationship with Britain — but it has already been plunged into another major crisis.

This time the 27-member union is being tested as Poland and Hungary block passage of its budget for the next seven years and an ambitious package aimed at rescuing economies ravaged by the coronavirus pandemic.

Their objection? A new “rule-of-law mechanism” that would allow the bloc to deny funds to countries that violate democratic norms — something that both Poland and Hungary have been accused of doing for years.

Ahead of a virtual EU summit Thursday where leaders hope to end the stalemate, here is a look at the budget battle.

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HOW MUCH IS AT STAKE?

The proposed 1.8 trillion-euro ($2.1 trillion) budget covers the period from 2021 to 2027, including 750 billion euros ($887 billion) in emergency funding to help the continent recover economically from the blow dealt by the pandemic.

The budget is meant to take effect on Jan. 1, and officials are desperate to have the agreement approved within weeks so money can flow fast.

Guy Verhofstadt, a member of European Parliament and a former Belgian prime minister, accused the Hungarian and Polish leaders of putting at risk lives and livelihoods threatened by COVID-19, “only because they want the EU to continue to fund their increasingly corrupt power grab.”

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WHAT TRIGGERED THE DISPUTE?

The governments of Prime Minister Viktor Orban of Hungary and Prime Minister Mateusz Morawiecki of Poland have for years been accused of eroding the rule of law, by weakening democratic institutions like an independent judiciary and a free press.

Both Poland and Hungary are ex-communist nations that were hailed as models of democratic transition after the Iron Curtain fell in 1989. Today, however, they are more often associated with the democratic backsliding of their right-wing populist governments.

At the heart of the crisis is the question of what the EU is — primarily a zone of free trade made up of independent nations or a union that shares common democratic values? Many in the bloc are keen to protect those norms. But they have been unable, within existing rules, to alter the course of Warsaw or Budapest. Hence the proposal for a way to cut off the money.

Vera Jourova, vice president of the European Commission, which ensures that EU law is applied in the bloc’s 27 nations, explained in September: “The taxpayers of many member states — they are fed up (with) funding the projects in countries where fundamental rights are violated.”

But the debate has raised another recurring, thorny question: How much power should the EU have to impose its will on member-states?

“This is about whether our fate is to be in our hands, whether we will decide about our affairs ourselves, or whether it will be in the hands of others,” Morawiecki said in the Polish parliament Wednesday evening.

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THE POLISH AND HUNGARIAN VIEW

The Orban and Morawiecki governments say they are being punished for having a worldview that is more conservative than the western European mainstream. They note they were elected by their people in democratic votes and that any accusations of undemocratic behavior are false.

Orban on Wednesday said that linking funding to the rule of law is a “political and ideological weapon” that was being used to blackmail and penalize countries that reject immigration.

“In Brussels today, they only view countries which let migrants in as those governed by the rule of law,” Orban said in a statement to the state news agency MTI.

Tomas Valasek, the chairman of the European affairs committee in Slovakia's parliament, called Orban's argument “nonsense,” noting that the EU budget says nothing about migration. Valasek said Slovakia also opposes the mandatory allocation of migrants to EU countries, yet supports the proposed budget and opposes the Polish and Hungarian vetoes.

The Polish government has expressed fears that the rule-of-law mechanism will be used arbitrarily to punish Poland on a range of issues, including the anti-LGBT views of its leaders.

Morawiecki said Poland rejects a mechanism that would “rebuke us like children.”

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ALLEGATIONS OF HUNGARIAN CORRUPTION

Some of Orban’s critics say that linking funding to the rule of law could threaten the very functioning of his government.

Under Orban, EU-funded public contracts have often been awarded to companies owned by his allies or family members, and details of these contracts have sometimes been kept secret — leading to frequent allegations of corruption.

In 2018, the EU agency that investigates how the bloc’s money is spent carried out more investigations in Hungary than in any other EU country.

George Soros, the Hungarian-American philanthropist and Orban critic, alleged Thursday that Orban “has constructed an elaborate kleptocratic system to rob the country blind.”

Orban has dismissed the corruption allegations.

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DISSIDENTS AT HOME

While the Hungarian and Polish governments insist they won't back down, there are many people in both countries who firmly side with the EU. Among them are opposition politicians and political activists who have been on the streets demonstrating for free courts and free media.

Amid the standoff, six Hungarian opposition parties banded together to issue a statement this week saying “the selfishness of the Orban government” was harming the nation's interests.

Budapest Mayor Gergely Karacsony sent a scathing letter to Orban on Thursday, saying the veto and other decisions would bankrupt local governments. “You are waging a war against two of your allies, the Hungarian local governments and the European Union," the mayor wrote.

In the Polish parliament on Wednesday, Borys Budka, the leader of the main opposition party, Civic Platform, urged Morawiecki to adopt the EU budget, saying not to do so amounts to treason.

“Today, anyone who threatens to veto a good budget for Poland is betraying the Polish national interest,” Budka said.

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HOW CAN THIS STALEMATE BE RESOLVED?

There is no easy way out. Michael Roth, the German minister for European Affairs, whose country currently holds the EU Council presidency, said this week there is no alternative to the package, and EU leaders say they will not abandon the mechanism.

However, they could give Poland and Hungary guarantees that its implementation will be limited. “Nobody should fear anything," the EU’s budget commissioner Johannes Hahn said.

If that strategy does not work, some leaders have suggested that the other countries could band together to at least pass the coronavirus aid package.

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Gera reported from Warsaw, Poland. Associated Press writer Samuel Petrequin in Brussels contributed.