Economy The EU unlocks the veto of Hungary and Poland...

The EU unlocks the veto of Hungary and Poland and reaches an agreement for the Budget and the Recovery Fund

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Brussels offers a safety net by guaranteeing Hungary and Poland that the Rule of Law Mechanism will not be used to pressure other issues and that a prior judgment from the CJEU will always be required.

The heads of State and Government of the 27 have settled this Thursday, after weeks of tension and paralysis, the dispute over the controversial mechanism of the Rule of Law, an instrument that will allow, in exceptional cases, freeze community funds for those who push the rule of law and community values ​​to the extreme.

The leaders have agreed at the European summit that launched today a solution that allows to circumvent the veto of Hungary and Poland, which were considered directly on the target, which had blocked the Union Budget for the next seven years and the Fund Recovery of 750,000 million euros that should help alleviate the effects of the pandemic. The money is released and much needed aid funds in Spain or Italy could be available in the second half of 2021.

“Agreement on the Financial Framework and the New Generation EU Recovery Package. Now we can start with the implementation and rebuild our economies. The package will lead the digital and green transition”, the President of the European Council celebrated at 7:00 p.m. Charles Michel.

Although technically the Heads of State and Government have given the green light in just 25 minutes and without debate in the room, in reality it has not been easy to find a way out. Diplomats describe as “intelligent” the proposal of the German presidency, which yesterday offered a fourfold network of guarantees that this mechanism will not be “discriminatory” or “arbitrary” and that it will not be used as a bargaining chip to pressure Hungarians and Poles on migration and asylum issues.

It will also have a special resource, an ’emergency brake’, so that the European Council can interrupt any sanctions process if there is a sufficient majority. And furthermore, the European Commission undertakes not to develop the specific regulation and not to publish the guidelines that will backbone its operation until the Court of Justice of the EU does not rule on whether the mechanism is fully in accordance with European law or no. Something that can take between six months and years, depending on when you turn to Luxembourg and the urgency with which the magistrates process it.

The solution satisfies Warsaw and especially Budapest, since Orban wins a precise time, manages to further limit the cases and reasons why the ‘weapon’ can be applied and also limits the volume of funds that I hypothesized Ethically they could be affected in the worst case scenario. The original idea is that once the rule of law mechanism is in force, it could be applied to all the money that is being disbursed or is going to be disbursed, including the pending funds from the current Budget. But the agreement to 27 contemplates that it will only be money from the new Financial Framework, as of January 1.

The issue of the date is thorny and it led the Netherlands, the partner that has been the most combative on the issue of the violation of community values ​​and principles (included in Article 2 of the EU Treaty) to ask the legal services of the Council a specific examination. On Wednesday, the day before, the Council’s lawyers and the Council’s general secretariat, supported by the legal services directed by the Spaniard Daniel Calleja, had endorsed the solution, which in practice will lead to the Commission to a political commitment not to apply something approved until the sentence is reached. But Mark Rutte wanted something firmer. When the lawyers gave their endorsement, there was no political discussion.

In this way, the EU formalizes in December what it thought had been closed last July. With luck and a speedy processing in the next few weeks on January 1 the new Budget will come into effect and the procedures can be activated so that the disbursement of funds begins as soon as possible.

Spain aspires to around 140,000 million euros between loans and transfers in the coming years, and has already committed part of that amount in the 2021 Budgets. Our country, like all others, must present between January and the end of April a national reform and resilience plan, including the steps it will take to modernize and transform the economy, according to the framework set by the specific recommendations that Brussels has issued in recent years that point to weaknesses structural. They are essential to be eligible for the money, and they need the approval of the European Commission and that no government put a bumper in the wheel in the European Council either.

Hungary and Poland had no problem with the Fund itself, nor with the 2021-2027 Budget, and in fact they need that money more than anyone else. But since they could not veto the rule of law mechanism, which is approved by a qualified majority, they had applied pressure or blackmail by blocking the great cake, which demands unanimity in some of its more technical aspects.

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