MEPs back plans to cut funds for EU states who weaken rule of law

The European parliament has backed plans to cut EU funds to member states that undermine the rule of law or allow corruption to fester – a move that could raise tensions with the governments in Hungary and Poland, which are accused of weakening judicial independence.

MEPs voted 397 to 158 for a draft law to freeze EU cash if a government was found to be eroding democratic values. The proposals will come into force if backed by EU member states and could lead to a fierce battle between national governments when they discuss the bloc’s €1tn post-Brexit budget later this year.

“Respecting the rule of law is a fundamental prerequisite for democracy, stability, prosperity and mutual trust,” said Petri Sarvamaa, a Finnish centre-right MEP, who co-authored the parliament’s proposals. “Without the rule of law, the European Union loses its credibility in the eyes of the citizens and in the eyes of the world.”

He added: “Taxpayers’ money has to be respected and spent according to the same rules and principles in all member states. We never know in which member state the rule of law will be questioned next.”

The draft law is the latest attempt by EU politicians to get to grips with countries seen to be flouting the rule of law. While the EU has opened disciplinary procedures against Poland and Hungary, officials have been looking for a better way of dealing with the issue.

Critics have said the current process is slow and cumbersome, with some governments, including the UK, reluctant to condemn a fellow member state.

British Conservative MEPs were among the 69 who abstained on the proposals, citing the fact they related to the EU’s post-Brexit budget. Labour MEPs voted in favour.

Creating a link between the rule of law and EU funds would have a big impact on some national budgets, especially in central and eastern Europe, where European money makes up a large proportion of infrastructure spending. In Poland EU funds make up 61% of public investment, in Hungary 55% and Romania 45%.

According to the parliament’s proposals, countries would lose EU funds for “generalised deficiencies in the rule of law”, such as failure to investigate fraud, absence of independent courts or failure to cooperate with EU anti-fraud inspectors. The plans would empower Brussels, aided by independent experts, to judge whether a government was breaking the rule of law, although parliament and EU governments would have four weeks to stop funds being frozen.

In an attempt not to isolate the local population, EU funds for NGOs and academic researchers would continue to flow.

The final outcome will not be known for months, as the proposal is tied to an agreement on the EU’s next €1tn budget, a seven-year plan for 2021-2028 that will not be agreed until after European elections.

The rule of law plan adds another layer of complexity to the future budget debate, already fraught due to Brexit and the end of the UK’s annual net €10-11bn contribution.

Member states have been weighing up less ambitious proposals, but will not make their next move until EU leaders take a view.

Countries in central and eastern Europe have already made their opposition plain, but Europe’s paymasters, notably Germany, France and the Netherlands, want tougher action against governments that flout basic values while reaping EU funds.