The EU budget commissioner has warned Poland and Hungary that Brussels is ready to exclude them from the Recovery Fund and to proceed with the project without them should they continue to block the approval of the European budget 2021-27. Johannes Hahn said Warsaw and Budapest "cannot prevent us from helping our citizens," adding that Commission lawyers have identified possible ways to circumvent objections to EU spending plans. This intervention, in an interview with Financial Times, puts pressure on the two countries that are blocking the 750 billion euro Recovery Fund and the EU's annual budget. Both countries oppose the application of conditionality linked to respect for the principles of the rule of law, which, they say, unfairly targets their nations. A position, this, which had already jeopardized theEU spending deal of last July.
Polish Deputy Prime Minister Jaroslaw Gowin, who belongs to the moderate wing of the coalition government, said last Thursday that he believes there is still room for a compromise. In this regard, Gowin added that an "interpretative statement" could be prepared by the Commission's legal service, but would need to be confirmed by the European Council. Gowin also said that it would be necessary to clarify that the principles of the rule of law they would not be used to "exert unjustified pressure on specific countries in matters other than the use of EU funds". However, a Polish government spokesman said Warsaw would not change its position and that any rule of law mechanism should be "in accordance with the treaties and the conclusions of the European Council".
The budget stand-off is expected to dominate the upcoming leaders' summit in Brussels. Hahn stated that the Commission's objective is to reach an agreement with Warsaw and Budapest, but also added: "We are fully aware of our responsibilities: that's why we have already started working on alternatives." Hahn said he was confident that, should the EU resort to the route of excluding the two member states, the recovery fund could nonetheless proceed approximately along the originally envisaged timeline.
“It should be discussed whether the EU should reduce the size of the Recovery Fund to take into account the absence of Poland and Hungary, or whether we should stick to the originally agreed 750 billion euros and distribute the proceeds only to 25 of the 27 members ”, said a Commission official, noting how this option would be based on EU law and be orchestrated by the Commission rather than an intergovernmental treaty. "I think the message is starting to get through that both countries will lose capital significantly next year and risk losing even more if they refuse to compromise," Hahn said on Thursday. According to the estimates of the European Council, Poland and Hungary would both be beneficiaries of the Recovery Fund, receiving grants equal to 3 percent of their gross domestic product. Were they to continue to stall the EU's next multiannual financial framework, Brussels would be forced to switch to a supplementary emergency budget for 2021, for the first time since 1988, further hitting the two countries' revenues.
The emergency budget would mean the loss of billions of euros for policies such as climate change, migration and the Erasmus student exchange programme. Brussels would not be able to disburse funds for new cohesion projects, also impacting Poland and Hungary. “This particularly concerns the Member States which are the biggest beneficiaries and recipients of cohesion funds,” said Hahn, urging that citizens' interests should be prioritized, “otherwise it would lead to a win-win situation for all”.
