Pauline Thinus, PhD candidate, Université Libre de Bruxelles (ULB)
This series of RevDem op-eds collects reflections on the contemporaneous challenges for the Rule of Law, which stemmed from the conference organised at Radboud University (Nijmegen) on 21-22 September in honour of Prof. Petra Bàrd. Following Benedetta Lobina’s op-ed on the impacts of the Russo-Ukrainian war, Pauline Thinus addresses the consequences of the use of Rule of Law spending conditionality within the European Union (EU).
Since the beginning of the ‘Rule of Law crisis’ in the 2010s, the EU has developed an array of instruments to restore the protection of this value within the Union. Spending conditionality is the novelty of the 2020s, which can be found in three instruments that are applicable in relation to the 2021-2027 budgetary cycle: the Recovery and Resilience Facility (RRF); the ‘Rule of Law Conditionality Mechanism’; and the horizontal enabling condition of the Charter of Fundamental Rights (CFR). The leverage of EU funds via spending conditionality has long been defended as a bold solution to end Rule of Law breaches, but the transactional approach it creates can be questioned in relation to a political value that was supposed to be unconditional and a prerequisite for Union membership.
The post-pandemic support of the RRF
In February 2021, the RRF was created following the adoption of Regulation 2021/241. Each Member State had to draft its own recovery and resilience plan (RRP), containing milestones and targets to be complied with in order to receive Union financial support for the post-pandemic recovery. For some countries, the final version includes Rule of Law-related measures, in line with their country-specific recommendations (CSRs) addressed in the framework of the European Semester in 2019 and 2020. For instance, the Hungarian and Polish plans include such ‘super-milestones’, which must be complied with before a first payment request.
A transactional approach to Rule of Law enforcement emerges here as RRPs represent financial contracts, adopted following a negotiation process between the European Commission and Member States, including specific measures to be taken for the protection of the Rule of Law which are associated with a specific amount of money to be disbursed once compliance is confirmed. These arrangements are detailed in the lists of measures and instalments in an Annex to the Council Implementing Decision of each RRP. The principle of ‘national ownership’ is at the core of the Facility and gives significant bargaining power to EU Member States.
The Rule of Law Conditionality Regulation
Regulation 2020/2092 on a general regime of (negative) conditionality for the protection of the Union budget has become the flagship instrument illustrating the turn to Rule of Law spending conditionality within the Union in the 2020s. Adopted in December 2020, the so-called ‘Rule of Law Conditionality Mechanism’ targets “breaches of the principles of the rule of law in a Member State [that] affect or seriously risk affecting the sound financial management of the Union budget or the (…) financial interests of the Union in a sufficiently direct way” (Art. 4). The Commission is entitled to propose financial measures to address such a situation for adoption by the Council of the EU (Art. 5 & 6). Such a decision negatively affects the funding of the Member State concerned, as it can involve for instance the reduction or suspension of EU funds. The broad material scope of this Regulation makes it a strong instrument, as it can target any funding, such as cohesion or recovery funds. It has so far been activated against Hungary in December 2022, which is facing a 55% suspension of commitments under three cohesion policy programmes amounting to EUR 6.3 billion.
The transactional approach relates here to the calculation of the negative impact of Rule of Law breaches on the Union budget in financial terms. In addition, ‘remedial measures’ are negotiated between the European Commission and the Member State concerned to put an end to this situation. This can be considered to be an informal contractualization of the protection of the Rule of Law, which was the initial focus of the European Parliament and the European Commission, even if the final version of the Regulation explicitly states that the essence of the Regulation is only to defend the Union’s financial interests and its budget.
The Charter of Fundamental Rights as a ‘horizontal enabling condition’
Following the adoption of the 2021-2027 Multiannual Financial Framework in December 2020, European legislators had to establish the common rules governing EU funds under shared management. The new Common Provisions Regulation (CPR) adopted in June 2021 (Regulation 2021/1060) set them for the eight funds concerned for this budgetary cycle. A novelty arises in the establishment of ‘horizontal enabling conditions’, which must be complied with by the Member States throughout the entire period to receive reimbursement of expenditure from the Union budget for the programmes covered by these funds. This change aims to fix the weaknesses of the previous ‘ex ante conditionality’, which could lead to backsliding once a positive assessment on compliance by a Member State was confirmed by the European Commission allowing for the disbursement of EU money.
One horizontal enabling condition is the “effective application and implementation of the Charter of Fundamental Rights” (Annex III of the Regulation), Article 47 of which relates to justice systems, focusing in particular on the “right to an effective remedy and to a fair trial”. Here, again, a transactional approach to Rule of Law enforcement is created via spending conditionality. Similarly to a financial contract, reimbursment is indeed possible only when compliance with the Rule of Law is confirmed following a close dialogue between the European Commission and the Member States.
The turn to spending conditionality in the 2020s to maintain or restore the protection of the Rule of Law within the Union illustrates the ‘economisation’ of this value, i.e., its integration into the economic and financial spheres. Yet the related instruments have been designed to protect the economic and financial interests of the Union, which do not necessarily match the politico-legal essence of this value (see Oliver Garner and Teodora Miljojkovic’s op-ed from the time of the creation of the budget conditionality regulation). Instead, the instruments create a transactional and narrow approach to Rule of Law enforcement. Spending conditionality is thus a contractualization of Rule of Law compliance implying a negative or positive financial perspective. If the leverage of EU funds arguably has the potential to address Rule of Law breaches, the effectiveness of the three instruments mentioned above remains to be assessed.