Different sides came away with different impressions about what exactly had been agreed regarding rule-of-law guarantees in the big European Union deal that was clinched this week, guaranteeing the issue will be the subject of a political blow-up to come.
For much of the 90-hour negotiations, the Netherlands stuck with a demand that it should have a veto over whether funds can be released to member states.
If those countries have not implemented economic reforms as promised, or if they are flouting democratic norms, The Hague wanted the power to say “nee”.
The European Commission viewed this demand as going against EU law, according to which only it has the power to determine budgetary matters. Eventually a compromise was reached. It is phrased in a way that has allowed opposing sides to claim victory on the matter.
The Polish and Hungarian prime ministers held a joint press conference after the deal was reached in the early hours of Tuesday.
They were the primary targets of the demands for rule-of-law conditions: Hungary, due to the erosion of democratic norms and media freedoms by the right-wing nationalist leader Viktor Orbán as he has amassed power; and Poland, because of attempts to stack the judiciary and an LGBT crackdown.
A triumphant Mr Orbán told media the two had “successfully thwarted” an effort to attach conditions to the funds: “We have also protected our national pride. We have successfully refused all attempts that would have tied access to EU funds to ‘rule-of-law criteria’,” he declared.
Shortly afterwards, Dutch prime minister Mark Rutte told reporters that while specific references to rule of law had been taken out, the meaning remained and he was going to uphold it.
“Orbán now presents it as a great victory, because all kinds of words that were in it that he didn’t like are no longer there,” Mr Rutte said. “The core is there. The core is there . . . I’m really going to hold that up.”
Checks
The text has two different checks on release of funds, depending on whether the money concerned is from the once-off recovery fund to address the economic impact of the coronavirus pandemic, or from the standard seven-year budget.
The issuance of the recovery funds is now subject to a multi-layered system. The commission assesses a country’s application for the funds and recommends a decision, taking into account whether the plan is in line with criteria such as recommended reforms, and climate change targets.
The commission's decision will then need to be approved by a qualified majority vote by the national leaders in the European Council (meaning it must have the support of more than 55 per cent of member states, representing at least 65 per cent of the EU's population).
If a country feels that another member state has not met its targets, it can call an emergency halt, stopping the money from being released until the matter has been “exhaustively” discussed at the next European Council.
How this will work in practice, whether the sheer peer pressure of discussion at the council will carry enough weight, and whether a country could vexatiously pull the emergency brake repeatedly to deny a fellow member state funds, are all open questions.
Ambiguity
But the true ambiguity surrounds the system of checks on the issuance of budget funds.
The agreement states the EU’s “financial interests” will be protected, particularly in regard to “article 2 TEU”, which is the item of law that states that the union is founded on “human dignity, freedom, democracy, equality, the rule of law and respect for human rights”.
It then states that the council “underlines the the importance of the respect of the rule of law”.
Following these two things, the deal states “the commission will propose measures in case of breaches for adoption by the council by qualified majority”.
This sentence could have two meanings. What is to be adopted by qualified majority? Is it the proposal the commission is to draw up for a new system of checks? Or is it the ultimate decisions within that new system, on whether to release funds?
If it’s the former, the commission has the opportunity to bypass the veto of Hungary and Poland by introducing an ambitious rule-of-law check that will need only a qualified majority vote in the council to be adopted.
Journalists have pressed the commission to clarify what the sentence means.
“On this question the truth of the matter is that we are looking at it right now,” an official said. “I cannot tell you right now.”
It seems the meaning may be ambiguous to the commission itself.
To be finalised, the deal must win the approval of the European Parliament, which has vowed to press for increased budget funds and tighter conditions on rule of law. It must then be formally adopted by the EU leaders again.
Whatever happens, by allowing member states to temporarily freeze the issuance of funds, and leaving open a debate on what that key sentence signifies, the deal has guaranteed political fireworks ahead.