Should European Funds Be Bound by Criteria Regarding the Rule of Law?

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Around the end of May 2017, a leaked document from the German government circulated around the media. According to a reputable foreign media (Reuters, Politics, etc.), claiming to be in its possession, it represents Germany’s draft position on the future rules for the allocation of the EU budget. The document was prepared in relation to the forthcoming 2018 budget negotiations and the post-2020 budgetary framework (2021-2027).

In a nutshell, the 7-page document proposes to consider whether “the receipt of financing from the European Cohesion Fund should be linked to the fundamental principles of the rule of law”. Given that Germany is the largest net donor to the EU budget, its position will surely weigh in heavily on the upcoming negotiations, which explains the importance of the leaked document.

At present, only Poland and Hungary are mentioned among the countries to be potentially affected by such “tying” of European funds with the rule of law. Several actions by the Polish government in the past two years have aimed at subordinating the judiciary to the executive, which has earned them a dishonorable mention in the said document. In Hungary, the “elephant in the room” is Viktor Orban, whose dictatorial and antidemocratic march has been gaining him power since 2010. Orban’s last “bang” was the drafting of a bill that would lead to the closure of the Central European University as it stands.

Bulgaria is currently not ranked by foreign media among the possible “victims” of such conditionality. However, local media quickly picked up on the news and gave it their own interpretation of a potential “threat” – as they say, a guilty conscience needs no accuser. This comes as no news, as for years local observers, as well as renowned international organizations, have been drawing attention to Bulgaria’s deficits in terms of the rule of law and the independence of the judiciary.

In fact, the binding of European funds under certain conditions (the conditionality) is not a new idea. It was also mentioned at the time of drafting the national documents of Bulgaria for the current programming period (2014-2020) regarding both the framework and the operational programs.

The great expectations for some working mechanism to impose reform “externally“, however, quickly evaporated. It turned out that the conditions would actually be the writing of strategies, ie. the EC will expect strategic documents and action plans to be drawn up in some areas where the documents are not convincing enough. The local authorities have relaxed because Bulgaria is notoriously renowned, if not for anything else, for the large number of often impressive strategies and plans that reads almost no one, and even less than that try to follow and seem them through. These documents are written quickly and without much effort, and their placement as a condition is the last thing that can scare the Bulgarian administration.

In the beginning of June, however, hopes for another kind of a “more real” conditionality were again fed up. The news was welcomed by a number of experts and public figures in Bulgaria, who have long since lost trust in local institutions. The expectations that any positive reform is of an external origin is also based on the latest history of the country, according to which most positive changes in the economy and society as a whole have come from outside of the country, mostly thanks to the IMF in the early years of the transition, and the European institutions in the later ones. According to this view, after the transition and the achieved NATO and EU membership, there is currently a “vacuum” or lack of a clear target, a guiding star if you will, to strive for.

Indeed, binding European funds with clear commitments from recipient countries sounds like a good idea. The big problem of a number of European policies and institutes is precisely the lack of an enforcement mechanisms, for example real penalties, which could help as a correction to a “misbehaving” member state.

Take for example the Stability and Growth Pact. The Pact is a set of rules for prudent fiscal policies that EU member states have to abide by, but are in fact ignored for the most part. The countries in the EU have been collectively disregarding the requirement for a cap on the budget deficit (3% of GDP; and for government debt – 60 % of GDP) for years and the absence of any penalties for the guilty” parties is just one of the many sad examples why it doesn’t work within the EU policy.

There has been an overdue need for working enforcement mechanisms within both the EU and the eurozone – not only in terms of the rule of law and democratic principles. The question, however, remains: can the European institutions and the so-called acquis step up to the challenge in light of the EU’s less than impressive experience with other similar initiatives so far? Is it possible that we’ll see yet another flashy EU mechanism with a number of well-presented rules, boards, indicators, and criteria that ultimately serves as a political instrument? Will the rules continue to be ignored when the political interest of a united Europe trumps reason and the founding principles of the Union once again? Otherwise, the notion of attaching conditionality to European funds is not so bad.

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