Poland likely to veto EU budget and recovery fund if rule of law condition is attached

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TVN24 News in English, Reuters, PAP

Poland's Prime Minister Mateusz Morawiecki said it was hard to judge if the EU would reach a deal on its long-term budget and a proposed recovery fund during talks among the bloc's national leaders in Brussels on Friday and Saturday. Even if the leaders arrive at an agreement, Poland is likely to veto the deal as long as the rule of law condition is attached to it.

"Assessment of the negotiations regarding the Multiannual Financial Framework and the recovery fund will depend on the total sum of available funds earmarked for modernising our infrastructure, farming, energy transformation, and many other very important areas of economy and social issues. Therefore, it is hard to judge what the result of our today's, and likely tomorrow's, talks will be," Poland's prime minister Mateusz Morawiecki said on Friday, ahead of the two-day EU summit in Brussels.

Prime minister Morawiecki also said Warsaw objected to budget rebates for rich countries and plans to attach rule of law strings to funding.

Furthermore, an MEP from Poland's ruling Law and Justice (PiS) party, Patryk Jaki, has called on PM Morawiecki to veto the EU budget and coronavirus recovery fund, should they be conditioned upon observing the rule of law.

"Veto or death! Each time the "rule of law" mechanism is brought up - veto. There are no funds high enough for Poland to let her hands to be tied when it comes to shaping its independent policy," former deputy justice minister wrote on Facebook on Friday. Currently, Mr Jaki is a member of the European Parliament Committee on Civil Liberties, Justice and Home Affairs.

It was this very committee that on Thursday voted in favour of a report criticising the "continuing deterioration of democracy, rule of law and fundamental rights in Poland" under the eurosceptic Law and Justice (PiS) party.

The report's authors said solid democratic safeguards would be a precondition for approving the recovery package.

Wide gaps to bridge

European Union leaders will try to bridge major differences at a summit in Brussels on Friday and Saturday over a proposal to inject hundreds of billions of euros into their economies to help them rebuild from the COVID-19 pandemic.

German Chancellor Angela Merkel warned that a deal was far from certain on the plan to attach a new 750-billion-euro ($850 billion) recovery fund to the bloc's next budget for 2021-27 projected at slightly above 1 trillion euros.

Dutch Prime Minister Mark Rutte was holding out in a tug-of-war between the wealthy and thrifty northern states on one side and their southern peers, debt-ridden and hit harder by COVID-19, on the other.

Hungary threatened a veto and Poland also opposed a push to condition handouts more on respect for the rule of law.

Here are the main gaps the 27 EU heads must bridge to unlock the money and heal divisions.

1. SIZE

The so-called Frugal Four - the Netherlands, Austria, Denmark and Sweden - want a EU budget smaller than the 1.074 trillion euros proposed by the European Commission, the EU executive.

Beneficiaries of EU development programmes and farm subsidies - including Poland and other poorer states on the bloc's eastern flank but also France, Italy and Spain - want to keep their generous benefits.

The extra 750 billion euros the Commission would borrow on the market for member states to spend is considered too much by some member states, and too little by others.

2. REBATES

Germany, Austria, the Netherlands, Denmark and Sweden want to keep reductions on their contributions to the EU's joint coffers. Others want the reductions ended.

3. GRANTS AND LOANS

The southern members wants free grants. The Dutch want repayable loans to be offered instead, and say acquiring joint EU debt to finance recovery is a non-starter.

The Commission has proposed that 500 billion euros out of the 750-billion-euro fund would be made available as free subsidies and the rest as repayable loans. That could change.

4. ELIGIBILITY

Eastern member states including Lithuania and Bulgaria oppose the Commission's proposal to channel most of the 750-billion-euro fund to southern countries such as Spain, Italy and Portugal, based on their high unemployment before the pandemic.

To get more of the pie, they say criteria such as depopulation should be honoured, or that access to these extra funds should be tied solely to the scale of economic slump in each member state due to COVID-19.

Under the latest proposal by summit chairman Charles Michel, 70% of the recovery fund would be paid out in 2021-22 based on the former set of criteria, while the rest would go in 2023 and take into account the latter. That is being contested.

5. CONDITIONS

The wealthy north says enacting economic reforms should be a requirement for member states to access the recovery money. That is anathema to the south, which wants no strings attached.

Most EU countries want to be able to freeze out any state flouting basic democratic principles, which prompted nationalist Hungarian Prime Minister Viktor Orban to threaten to veto the whole package.

Ways of deciding who gets what from the recovery fund, and ensuring a fixed portion of EU spending goes into projects to advance digitalisation and fight climate change, are other elements all 27 EU leaders need to agree on.

6. REPAYING DEBT

When and how to repay the 750 billion worth of borrowing remains unresolved, with ideas for more EU-wide levies on carbon dioxide emissions or single-use plastics seen as less contentious than introducing new digital or financial taxes.

7. TIME FRAME

Northern and southern member states disagree on when the stimulus money would start flowing and stop.

Autor:gf

Źródło: TVN24 News in English, Reuters, PAP

Źródło zdjęcia głównego: PAP/EPA/JOHN THYS