After months of wrangling over the terms of a budget and coronavirus recovery package totaling more than $2 trillion, the European Union agreed Thursday night to end a standoff with two member states that threatened to delay the much-needed relief funds.
The budget had been held up by Hungary and Poland, which had objected to a provision that tied the disbursement of funds to whether each member state upheld the EU’s rule-of-law standard. Such a mechanism would have put EU funds for both member states in jeopardy due to their crackdowns on democratic institutions meant to provide checks on executive power.
EU negotiators agreed to effectively delay this provision by giving the European Court of Justice (ECJ) a role in ruling on its legality, should it be challenged by a member state before it is applied.
By challenging the provision, Poland and Hungary can expect no-strings-attached EU funding for months – possibly years –as a case works its way through the court. This potential delay would particularly benefit Hungarian Prime Minister Viktor Orbán, who faces national elections in 2022.
The end to the standoff allowed the EU to move forward with all-night negotiations over ambitious reductions in European carbon emissions. Friday morning, member states announced an agreement to reduce emissions by 55% before 2030, a much more ambitious goal than previously agreed upon.
The budget agreement means the EU is now able to move forward with legislation to enact the more than $900 billion coronavirus recovery fund, under which Brussels will borrow hundreds of billions from the markets and dole it out as budgetary support to member states. It also paves the way for ratifying the EU’s $1.1 trillion seven-year budget.