EU can withhold funds from Hungary and Poland over democratic backsliding, court rules

Judges and spectators in the European Court of Justice
Judges preside over a hearing at the European Court of Justice in Luxembourg in November 2018.
(Sylvain Plazy / Associated Press)

In a ruling hailed as a boost to democratic values, the European Union’s highest court said Wednesday that the 27-nation bloc can suspend support payments to member states if they breach rule-of-law principles.

The right-wing governments of Hungary and Poland, which had challenged the EU’s right to take such action, responded by arguing that the withholding rule lacked a proper legal basis and would fundamentally interfere with their running of national affairs.

Both nations, large recipients of EU funds, have come under increasing criticism over the past few years for veering away from democratic norms with policies such as exerting excessive control over the judiciary, stifling media freedom and denying the rights of LGBTQ people.


When it comes to democratic principles, “the European Union must be able to defend those values, within the limits of its powers,” the European Court of Justice said in Wednesday’s ruling.

The court decision was the last impediment to EU institutions withholding funds from any government they consider to be at odds with core democratic principles. The rule, seen as the EU’s most potent weapon to prevent a democratic rift from deepening within the bloc, was approved 14 months ago, but the executive European Commission waited to apply it.

EU Commission President Ursula von der Leyen promised to “act with determination,” and EU legislators immediately urged her to enforce the rule against Poland and Hungary within days, not months. Withholding any funds could take until the end of the year because of institutional rules and a tortuous approval process.

Judges like Waldemar Zurek say the nationalist government is intimidating them and putting the rule of law in Poland’s young democracy at risk.

The reaction from Hungary and Poland was swift. Polish Justice Minister Zbigniew Ziobro — who is responsible for many of the changes seen as eroding the independence of judges — called the court’s move a turning point.

“It is a gloomy date that will be written in the history books,” Ziobro said. “From an area of freedom, the EU is changing into an area where it will be possible to use unlawful violence in order to take this freedom away from member states and limit their sovereignty.”

Hungarian Justice Minister Judit Varga called the court ruling a “political judgment” and proof that the EU was abusing its power.

“The ruling is another application of pressure against our country because we passed our child-protection law during the summer,” Varga wrote, referring to legislation approved last year which forbids providing children with media content that depicts homosexuality or gender changes.

Inside a sleek but unobtrusive office building a few blocks from the River Danube, conference rooms and executive suites that once buzzed with activity will stand vacant by the month’s end.

The EU’s passage of the rule-of-law funding mechanism predates the Hungarian law, which many critics have decried as a violation of LGBTQ rights.

European officials on the other side of the debate also felt a tipping point had been reached with Wednesday’s ruling. The reactions showed how democratic discourse in the EU is polarizing and splitting the bloc.

“This ruling is a milestone,” Belgian Prime Minister Alexander De Croo said. “It becomes ever more difficult for member nations to say these [democratic] rights do not entail obligations and that they can be pushed aside at will.”

Both Hungary and Poland have in the past contended that the court was overstepping its authority in approving a new mechanism not described in the EU’s own treaties. They said making such a link between finances and the legal decisions of independent member states amounted to blackmail from Brussels.

The court countered that argument, saying that democratic backsliding had not only a political impact but also affected budgetary matters.

“The sound financial management of the union budget and the financial interests of the union may be seriously compromised by breaches of the principles of the rule of law committed in a member state,” it said.

Because of extended financial vetting not directly linked to Wednesday’s ruling, Poland has yet to receive some $41 billion from the EU’s pandemic recovery fund, while Hungary’s $8 billion was also held up. Those funds could now be further held back because of the ruling.

Since joining the bloc in 2004, both nations have been major recipients of EU funds to help rebuilt national economies that stagnated under communist rule. Respecting democratic rule of law is a bedrock criterion for any nation’s admission to the EU, and the court insisted that, once in the bloc, a member country must stick to those principles.

Some lesbian, gay, bisexual and transgender people are leaving Poland following the anti-LGBTQ campaign rhetoric the president used to get reelected.

“The court specifies, first, that compliance with those values cannot be reduced to an obligation which a candidate state must meet in order to accede to the European Union and which it may disregard after accession,” it said.

In Hungary, Prime Minister Viktor Orban has been pushing what he calls “illiberal democracy,” which his critics say amounts to stifling democracy.

In Poland, the Law and Justice party overwhelmingly dominates government and has also increasingly faced criticism from other EU member nations. The right-wing government in Warsaw has broken Poland’s own laws in order in order to gain political control over courts and judges.