Democracy and the rule of law are considered the foundations of the European Union, but they are increasingly under pressure in parts of Europe. The conflict over a rule of law mechanism for the EU budget, which provides for funding cuts in the event of violations, recently escalated with the veto of the Hungarian and Polish governments. As part of the Citizens' Dialogue series of the non-partisan Europa Union Deutschland (EUD), Marek Prawda, representative of the EU Commission in Poland, and Selmin Çalışkan, Director of Institutional Relations at the Berlin office of the Open Society Foundation, discussed with the more than 90 participants* "30 years after the peaceful revolutions in Europe: How do we deal with democracy and the rule of law today?". Possible solutions to the budget crisis as well as approaches to strengthen the central democratic role of European civil society - even against the resistance of national governments - were discussed.
EU budget: violations of the rule of law to become expensive
The European Parliament and EU member states have agreed in principle on a reconstruction fund and the Multiannual Financial Framework 2021-2027. The reconstruction fund is to include 750 million euros that can be used to combat the consequences of the Corona pandemic. The Multiannual Financial Framework sets the spending ceiling for the 2021-2027 timeframe at €1.074 trillion and the areas in which the EU will invest. According to these specifications, the annual EU budget can be decided. In this context, the Reconstruction Fund and the Multiannual Financial Framework were negotiated as a package totaling €1.8 trillion.
This package also includes a new rule of law mechanism. The rule of law means that the government and administration of a country may only act within the framework of existing laws. The fundamental rights of citizens must be guaranteed and government decisions must be subject to review by independent courts. In case of violations of these principles or in case of improper handling of EU funds, the rule of law mechanism would allow the EU to cut financial resources to its member states under certain conditions.
The language of money
Whether such financial sanctions against rule of law violations are effective is debatable. Along with the sanctioned governments, civil society often suffers financial repercussions. During the EUD Citizens' Dialogue, a majority of participants in a survey indicated support for financial sanctions against rule of law violations. Marek Prawda, the representative of the EU Commission in Poland, also considers financial sanctions to be indispensable, since usually only the language of money is understood by governments. Moreover, it must always be guaranteed that the EU's finances are in good hands. According to him, the EU must send a strong signal for the observance of rule-of-law principles, whereby the rule-of-law mechanism could set clear limits. At the same time, solutions were discussed to ensure that even when governments are sanctioned, money can continue to flow past them to the final recipients of EU funding.
Veto by Hungary and Poland
Because they want to prevent the rule of law mechanism from taking its proposed form, Hungary and Poland have vetoed the EU budget. The respective governments have been accused of undermining the rule of law for years. Time and again, they make headlines with measures to restrict media freedom or problematic judicial reforms. The European anti-fraud agency OLAF also identifies Hungary as a front-runner in the misuse of European subsidies.
The governments vehemently reject these accusations. Nevertheless, they are now blocking the negotiated package. They already voted against the introduction of the rule of law mechanism. Since this only needed a qualified majority in the Council of Ministers, the majority prevailed against the two governments.
In "retaliation," Hungary and Poland are now blocking the entire package, which must be passed unanimously. In doing so, they are taking advantage of the fact that the EU wants to channel the money from the reconstruction fund as quickly as possible to the countries that are suffering particularly badly economically from the Covid 19 pandemic. By blocking the negotiated package, they hope to put enough pressure on the other member states to reopen negotiations on the rule of law mechanism.
Plan B: Hungary and Poland risk going away empty-handed
So far, however, the two countries' calculation is not working out: Apart from the Slovenian prime minister, the European heads of state and government are united in their support for the rule of law mechanism. Marek Prawda, too, has expressed his reservations about re-opening negotiations on the mechanism. The EU Commission is not ready to compromise on this issue.
In the search for ways out of the EU budget stalemate, many unconventional proposals have been discussed in Brussels in recent weeks. Even the "nuclear option" of adopting the reconstruction fund without Hungary and Poland is on the table, which would represent an unprecedented level of escalation. In this case, the aid could be secured by voluntary guarantees from the states, instead of directly through the EU budget, as has been the case so far. In this case, the rule of law mechanism rejected by Hungary and Poland would be introduced for the reconstruction fund. This would make Poland and Hungary's participation possible, but unlikely. However, the veto would deprive the two countries of large sums of grants: 23.1 billion euros for Poland and 6.2 billion euros in the case of Hungary. Selmin Çalışkan and Marek Prawda agree that such a measure should not have a negative impact on civil society's ability to act. Governments should never be equated with their people, Selmin Çalışkan said. Instead, she calls for effective measures to strengthen civil society across Europe.
Shrinking spaces for civil society - a global problem
Functioning democracies need a strong civil society that facilitates critical political discourse and also has an important oversight function alongside the media. However, Selmin Çalışkan points out that it is not only in problem countries such as Poland and Hungary that the spaces for civil society engagement are shrinking. The phenomenon known as "shrinking spaces" is evident throughout Europe and globally. Spain, for example, passed a security law several years ago that restricts demonstrations in front of public buildings and penalizes the dissemination of photographic material of police operations if it is deemed to pose a threat to future police operations. In France, a similar bill to restrict documentation of police operations recently led to protests and was subsequently withdrawn for the time being. In addition, the Corona pandemic prompted many governments to declare states of emergency, which also entailed restrictions on press freedom and freedom of assembly.
On the other hand, NGOs such as the Open Society Foundation are trying to strengthen pro-European and progressive movements in countries where they are having a hard time. Selim Çalışkan reports about the support of municipalities in the Visegrád countries - Poland, Hungary, the Czech Republic and Slovakia - which are offered a platform for networking and help in the provision of health services. However, there are numerous obstacles to NGOs working across Europe: For example, donations from abroad are heavily regulated in many countries, and bureaucratic hurdles hamper activities.
A Single Market for Organized Civil Society?
Selmin Çalışkan calls for a strong commitment to European civil society from the EU in particular and refers to the idea of a "single market for philanthropy". Here, she envisions that not only companies should be able to act and operate throughout Europe without any problems. Charitable foundations and NGOs, which currently often have to deal with high regulatory hurdles, should also be specially protected by European law. For example, the advocacy group Philanthropy Advocacy is calling for a separate EU legal form for nonprofits that could reduce the burden of pan-European engagement and provide legal certainty.
For young, diverse voices in politics and civil society
Selmin Çalışkan also emphasizes the positive changes that have taken place in the field of political activism: the voices of activists are becoming much more diverse. For example, women increasingly participated in demonstrations, such as against the abortion ban in Poland, the pro-democracy protests in Belarus, and the Black Lives Matter movement in the United States. Following on from this, Clara Föller, national chair of the pro-European youth association Young European Federalists, intervened to ask about ways of strengthening young voices in politics and civil society. The largely pro-European youth, she said, run the risk of becoming discouraged if they continue to be politically underrepresented in Europe.
In her response, Selmin Çalışkan referred to the idea of the "diversity quota," which builds on the concept of the women's quota and seeks to extend it to broader groups. Important political positions should be filled proportionately with underrepresented groups, taking into account not only women but also LGBTIQ* people, disabled or poorer people, and indeed young people.
Can the Polish and Hungarian governments be bypassed?
In the dispute over the EU budget for 2021 to 2027, the EU Commission is now considering the "nuclear option" of adopting the budget without Hungary and Poland. For both Selmin Çalışkan and Marek Prawda, it is clear that there should be ways for the EU to bypass member state governments in the allocation of funds in an emergency. For example, EU funding should be able to go directly to funding recipients in the event of violations of the rule of law, and direct support for civil society on the ground should also be possible. Such a way of circumventing the rule of law would allow governments to be put in their place without at the same time punishing their populations. Marek Prawda emphasized that such measures should only be used in absolutely exceptional cases: "These sanctions are primarily intended not to be used. Their goal is to put pressure on."
With a view to the current budget dispute, the speakers* agreed: The EU must send a clear signal for compliance with minimum standards - and above all must not abandon civil society. Civil society plays a fundamental role in an intact democracy.
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