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EU could punish misbehaving nations financially rather than with Article 7

14th November 2017

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Support is growing throughout the EU to use condition-based funding to curb misbehaving nations.

The EU is having a hard time of late keeping its house in order with both Poland and Hungary not conforming to the wants and desires of Brussels – mainly resisting the ‘ever closer union’ notion – and of course, there is the ever developing situation in Catalonia.

To date, Brussels’ tactics have been “blunt and impractical”, to use the words of the Financial Times who are reporting on this story, so the EU are looking at a different approach in order to control those member states who aren’t conforming.

“Last week EU ambassadors in Brussels began to discuss ‘cohesion’ funding,” FT reports, “a debate that will run hot as the union negotiates a successor to its €1,000bn long-term budget. And if this early discussion is any clue, the omens are not good for Hungary and Poland.”

Germany has already backed the notion of linking funding for nations to rule of law requirements, and if a meeting last week is any indication, they are not the only ones. So it would seem these changes could fall into place in time for the EU’s next long-term budget (2021-2027).

Article 7

The EU hope this method would be more effective than invoking Article 7 (a law that would suspend EU voting rights for the country in question) when nations aren’t behaving, with many in the union believing that Article 7 is not warranted when it comes to Austria and Poland but that something needs to be done regardless.

Using the next EU budget to enact repercussions is seen as a much easier option and a far more immediate method of showing the union’s displeasure at the actions of certain nations. And, as FT states: “Attaching tougher conditions also fits the need to find savings once Britain’s €10bn-a-year net contributions come to an end.”

Both Poland and Hungary receive large amounts of EU funding, with Poland being the largest recipients of EU structural funds and Hungary receiving more than 3 percent of its annual GDP from this source, which is the highest proportion of any EU member state.

It’s early stages in this debate of course but it will no doubt be creating plenty of job opportunities for lawyers, especially in places like Poland and Hungary who won’t want to take any financial hits lying down.