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The European Union is likely to hand over billions of euros in Covid recovery funds to Hungary and Poland despite an angry dispute over judicial independence, EU sources told MNI.
To deny the countries their part of the EU's EUR800 billion Recovery and Resilience Facility would look like bullying, after both suffered steep economic contractions under the impact of the pandemic, one source close to the talks said. Poland is seeking EUR24 billion, while Hungary has applied for about EUR7 billion.
Both the EU and officials from the two countries are said to be "engaging constructively" on the issues, in contrast to the often stormy public exchanges between senior EU officials and Hungarian and Polish leaders.
MORE PROPORTIONATE RESPONSE
Sources said sanctions under the Rule of Law Mechanism approved by EU states earlier this year may be a more proportionate way of countering Hungary and Poland's infringement of EU laws. The European Court of Justice is expected to rule later this year in favour of the mechanism, which would enable EU budget funds to be withheld if rule of law breaches raised doubts over the manner in which they would be spent.
The EU will also need the support of the two countries for the passage of its own resources package, needed to repay borrowing under the RRF. Expected to include the yet-to-be-agreed global minimum corporate tax and a carbon border adjustment mechanism, officials hope it will be passed into law over the next year.
A Commission spokesperson said this morning that the assessment of both the Polish and Hungarian plans required to access RRF money remained "ongoing". The Polish plan is due to be approved by Aug. 1, although this deadline could be extended, while the Hungarian plan is due to be approved by the end of September.