The European Parliament is considering legislation that allows for budgetary sanctions to be levied against a member state showing “deficiencies” in respecting the rule of law. Even though the actual content and intent of the proposal is not as invasive as it might seem at a first glance, as the legislative procedure advances, the draft will inevitably provoke intense debate over the EU’s fundamental values and the possibility of bureaucratic overreach.
Background
In May 2018, the EU Commission (the core supranational institution tasked with promoting the general interest of the Union) submitted a draft for a new regulation meant to shore up rule of law in the bloc. Broadly speaking, it seeks to punish states that are falling behind on democratic and rule of law norms by freezing EU disbursements to the country in question. These EU funds are not insubstantial; in the case of Hungary, one country that has been criticized for its deteriorating democratic norms, the EU spent over four billion euros in 2017 alone, equivalent to 3.43% of its gross national income.
The EU Commission’s submission triggered the ordinary legislative procedure to approve the act, which would be directly applicable in the entire bloc once approved. After various EU bodies expressed their opinions on the text and proposed amendments, the draft was discussed by the European Parliament in plenary session on January 16 and 17, and a resolution (T8-0038/2019) containing an upgraded text was adopted with 397 votes in favor against 158, plus 69 abstentions.
According to the current draft, the Commission (assisted by a panel of independent experts appointed partly by the European Parliament and partly by the national parliaments of member states) will be tasked with monitoring deficiencies with respect to rule of law impacting use of EU funds meant to promote economic development, integration, and social inclusion. The targeted transgressions include: political interference in the authorities managing EU funds or controlling their utilization; a lack of judicial independence; instances of fraud, tax evasion, and corruption; and similar issues. In the event that a violation is identified, the Commission will have the power to decide measures, including blocking or reducing the allocation of funds and/or prohibiting a state from entering into negotiations on new disbursements. Sanctions will be implemented when the Council and the European Parliament approve them. In order to preserve the interests of the final beneficiaries, the member state will still have the obligation to finance the project using its own resources. Meanwhile, the Commission will submit a proposal to the European Parliament or the Council to transfer funds to an apposite reserve. This fund will be unlocked by the Council or the European Parliament to compensate the member state after the Commission verifies the deficiencies have been resolved.
