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Access to EU funds to be conditional on rule of law

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Access to EU funds to be conditional on rule of law

EU Treaty

(BRUSSELS) - EU countries that disrespect the rule of law will risk losing access to EU funds, under a provisional deal on 'budget conditionality' struck by the EU Parliament and Council negotiators on Thursday.

The 'conditionality' regime forms part of a package of measures linked to the EU's next multiannual financial framework and also its economic recovery plan.

It allows to protect the EU budget where it is established that breaches of the principles of the rule of law in a member state affect or seriously risk affecting the sound financial management of the EU budget or the protection of the financial interests of the EU in a sufficiently direct way. All EU funds, including resources allocated through the Next Generation EU recovery instrument, are covered.

MEPs succeeded in ensuring that the new law does not only apply when EU funds are misused directly, such as cases of corruption or fraud. It will also apply to systemic aspects linked to EU fundamental values that all member states must respect, such as freedom, democracy, equality, and respect for human rights including the rights of minorities.

Parliament's negotiators also insisted that tax fraud and tax evasion are considered possible breaches, by including both individual cases and widespread and recurrent issues.

They also succeeded in securing a specific Article that clarifies the possible scope of the breaches by listing examples of cases, such as threatening the independence of the judiciary, failing to correct arbitrary/unlawful decisions, and limiting legal remedies.

There is a strong preventive aspect for the mechanism: not only can it be triggered when a breach is shown to directly affect the budget, but also when there is a serious risk that it may do so, thus ensuring that the mechanism prevents possible situations where EU funds could finance actions that are in conflict with EU values.

To ensure that the final beneficiaries who depend on the EU support – such as students, farmers, or NGOs – are not punished for the actions of their governments, they can file a complaint to the Commission via a web platform, which will assist them in ensuring they receive the due amounts. The Commission will also have the option of making a financial correction by reducing the next instalment of EU support to the respective country in question.

The time that EU institutions will have for adoption of measures against a member state, if risks of breaches of the rule of law are identified, is reduced to a maximum of 7-9 months (down from 12-13 months as initially requested by Council).

The Commission, after establishing the existence of a breach, will propose to trigger the conditionality mechanism against an EU government. The Council then will have one month to adopt the proposed measures (or three months in exceptional cases), by a qualified majority. The Commission will use its rights to convene the Council to make sure the deadline is respected.

The agreed compromise now needs to be adopted formally by the Parliament and EU ministers.

Further information, European Parliament

Legislative train of the Rule of Law Conditionality regulation

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