hungary and Poland block budget- the EU in crisis

On Monday, EU ambassadors met to discuss the EU’s budget, or multi-annual financial framework (MMF), for the upcoming seven years and a COVID-19 recovery fund aimed at supporting member states in tackling the world wide pandemic – but Hungary and Poland did not play along.

The contentious issue was a clause that links the provision of funds to the respect for the rule of law in the Member States (no idea what we’re talking about? Find out more in this article). Although Hungary and Poland voted against the inclusion of this provision in the legislation, they did not manage to block it as it only required a qualified majority to be in favour (55% of the EU countries representing 65% of the population have to approve).

However, they did use their effective veto power later down the line practically rendering the 750€ billion recovery fund ineffective as member states would not be allowed to borrow from it. They also indicated that they would not give their approval to the final adoption of the 1.074€ trillion seven-year budget that is currently being negotiated. EU officials called this an institutional crisis and the organisation appears to be in deadlock – Orbán has shown himself resistant to any type of pressure from the other member states and even personal appeals by Merkel.

As the member states will also have to ratify a decision related to the budget in their own parliaments before it can come into effect, time is ticking if the EU wants to have the new budget plan in place before 1 January 2021. What’s worse, the budget also foresaw a big portion to be put into the EU COVID recovery fund, designed to help the Member States deal with the pandemic which both Poland and Hungary are significantly affected by and who would be some of the main beneficiaries of the fund.

So what does Hungary and Poland’s refusal to approve the budget tell us? One could interpret it as the Polish and Hungarian leaders being more concerned about not having their national sovereignty ‘infringed’ by the rule-of-law mechanism than about helping their people who are suffering a pandemic. In any case, the unresolved budget issue will be further discussed on Thursday in a European Council video conference between the heads of state and government but whether discussions will be more fruitful there is still open for debate.