EU budget blocked by Hungary and Poland over rule of law issue

The package includes €750 billion (£673bn; $888bn) for a COVID-19 recovery fund.

Ambassadors of the 27 member states meeting in Brussels were unable to endorse the budget because the two countries vetoed it.

Hungary and Poland have been criticized for violating democratic standards enshrined in the EU's founding treaty.

The EU is currently investigating both countries for undermining the independence of courts, media and non-governmental organizations. The clause threatens to cost them billions of euro in EU funding.

EU states had already agreed on the €1.1 trillion budget for 2021-2027, and the coronavirus stimulus package after a marathon four-day summit in July.

The ambassadors had voted through the clause that made access to EU funds conditional on adherence to the rule of law, because it only required a qualified majority, the German EU presidency said.

But the budget and the rescue package needed unanimous support and were then blocked by Poland and Hungary.

Polish Prime Minister Mateusz Morawiecki threatened a veto last week.

On Monday (16 November), Polish Justice Minister Zbigniew Ziobro said the rule of law issue was "just a pretext".

"It is really an institutional, political enslavement, a radical limitation of sovereignty," he said.

But Austrian Chancellor Sebastian Kurz, addressing a conference shortly after the budget was blocked, said that "upholding the principles of the rule of law is an absolute necessity" because the sums being handed out by the EU to member states were so vast.

‼️ #COREPER update: The 2nd decision was on the agreement in principle on the Multiannual Financial Framework & Recovery Package

? 2 EUMS expressed reservations with regard to their opposition to 1 element of the overall package - but not to the substance of the #MFF agreement

— Sebastian Fischer (@SFischer_EU) November 16, 2020

Romanian Prime Minister Ludovic Orban said the rule-of-law clause was an important protection to ensure taxpayer's money is "spent in a just and effective manner".

He called on EU states "to work together" adding: "We need to refocus and get this agreement done."

German ambassador Michael Clauss, who chaired the meeting, warned that the EU would face "a serious crisis" if the financial package was not quickly adopted.

"We have already lost a lot of time in view of the second pandemic wave and the severe economic damage," he said.

In a tweet, Johannes Hahn, EU-Commissioner for Budget and Administration, said he was "disappointed" by the veto.

He urged member states to "assume political responsibility and take the necessary steps to finalize the entire package".

"This is not about ideologies but about help for our citizens in the worst crisis since World War Two," he added.

Reacting to the news that the carefully negotiated long-term budget and recovery package was now blocked in Council, EUROCHAMBRES President Christoph Leitl this morning said: “It is shocking that political games are now blocking the much needed EU budget and recovery package, just days after agreement between the Council and Parliament. The ongoing economic impact of this deep crisis is plain to see from the figures. Chambers across Europe can testify also to the social and human impact, with entrepreneurs losing livelihoods and staff losing jobs every day. Further delays to the €1.82 trillion package undermine Europe’s recovery before it has even begun: we need agreement at this week's Council Summit!”

The impasse will be debated by EU European affairs ministers today (17 November) and by EU leaders in a video-conference on Thursday (19 November). However, officials say a solution might take longer to find.