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MNI EXCLUSIVE: Rule Of Law Fudge May End EU Budget Standoff

A rule of law requirement may only be applied in exceptional circumstances

Possible proposal to end standoff over EU budget

The deadlock over the European Union's 2021-27 budget and Covid recovery programmes could potentially be broken by an addition to the agreement making clear that requirements for Poland and Hungary to uphold the rule of law in order to qualify for EU funds will only be enforced in extreme situations, an EU source told MNI.

"Maybe there could be an extra declaration - something that will make clear to both parties that the new mechanism is not a copy of the Article Seven procedure and will only be used in the event of 'very concrete' and very severe breaches of Rule of Law," the source said.

Article Seven of the EU Treaty allows certain rights to be withdrawn from a member state if it persistently acts in breach of the EU's founding values, such as human rights, democracy, rule of law, although a vote to enforce this requires a unanimous vote by other member states.

"It would make it clear that the whole new mechanism is not intended to punish them," the official said.

FINANCIAL PRESSURE

The source suggested that financial pressure would also prove a compelling force for agreement in talks by the German EU Presidency, the EU Commission and EU President Charles Michel with Poland and Hungary, which are blocking approval of the Multiannual Financial Framework and the Next Generation recovery plan.

"Hungary and Poland are also big beneficiaries of the MFF and NexGen, they are still suffering the effects of a second Covid wave, a huge economic impact. I believe that there has to be a deal, because their people and businesses benefit enormously," the source said.

The source indicated that the EU would not back down over its new Rule of Law mechanism.

"It received the necessary QMV (Qualified Majority Vote) in the Council (EU-27 member states) and was approved also in the Parliament- so it will come into force."

EU officials expect that an effort will be made to broker a deal by the time of the EU's December Summit of leaders on Dec. 10-11, which is set to be held face to face.

MNI Brussels Bureau | david.thomas.ext@marketnews.com
MNI Brussels Bureau | david.thomas.ext@marketnews.com

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