- The proposed rule of law mechanism in the EU remains ambiguous and will likely be postponed due to legal battles, which suits Budapest and Warsaw.
- The threat of financial sanctions could force Poland and Hungary to alter their policies directly linked to the EU funding but will not halt the illiberal drift in other areas.
- While the heated standoff over the rule of law will continue for the foreseeable future, Poland’s or Hungary’s exit from the EU remains very unlikely.
Poland
After the EU summit on 10-11 December Poland is set to receive a record EUR 173bn from the EU funds in the next seven years. Meanwhile, the rule of law mechanism remains ambiguous and is likely to be delayed, while a potential split in the ruling coalition has been prevented. Despite earlier threats to pull out from United Right, the board of the United Poland (SP) voted narrowly in favor of remaining in the government. This was likely due to the lack of viable alternatives as all coalition parties would lose in case of a breakup and/or early general election. However, internal cracks will not disappear, and SP will likely hold Prime Minister Mateusz Morawiecki personally accountable if the European Commission launches the new rule of law procedure on Poland.
The deal is unlikely to force the country’s right-wing government to deviate from its controversial policy agenda. Attempts to gain and exercise its leverage over the judiciary and media are the main concerns in Brussels. Given still few details about the application of the rule of law mechanism, it remains unclear whether policies in these areas would qualify as breaches of the rule of law affecting the management of EU funds, thereby posing the threat of financial sanctions. This will likely be the new frontier in the long-lasting standoff.
If Poland were to face a real threat of funding cuts, the United Right could offer some symbolic concessions. However, it would be unlikely to reverse the far-advanced judiciary reform, which has been the cornerstone of its agenda since coming to office in late 2015. Besides renewed frictions in the coalition, this would trigger another high-profile dispute with Brussels over sovereignty and could rekindle discussions of Poland’s potential exit from the EU. Despite such threats, a Polexit scenario appears very unlikely in the medium term given high public support for EU membership and the lack of genuine political will for a move with far-reaching economic and geopolitical implications.
Hungary
A compromise agreement with the EU does not pose immediate threats to the ruling Fidesz and Prime Minister Viktor Orban. Both Budapest and Warsaw will likely appeal the rule of law regulation in the European Court of Justice, hoping to delay its launch for several months. This would suit Orban who is well-placed to secure a third term in office in the spring 2022 parliamentary election. Yesterday, 15 December, the Fidesz-dominated parliament passed amendments to the electoral law, which could further hinder the opposition’s prospects in the upcoming poll. And in case the EU expedites the rollout of the new rule of law mechanism, Orban could use the conflict with Brussels to mobilize his core electorate.
However, the new mechanism, which focuses on the sound management of EU funds, could bring headaches for Budapest in the medium term. Hungary has been a leading country in the bloc in terms of irregularities in using the EU funds, according to the European Anti-Fraud Office, while the Commission’s recently published rule of law assessment highlights limited efforts to investigate high-profile corruption. As a result, Budapest might be forced to step up the surveillance of the use of EU funds to avoid sanctions. While this could negatively affect Fidesz’s allies and weaken the ruling party in the longer-term, they have sufficient time to reorient their business models, potentially focusing on large infrastructure projects financed by China or Russia.
As in Poland, the tightened rule of law regulation will not stop Orban’s illiberal policies and rhetoric. Fidesz has been thriving politically on conflicts with Brussels in recent years, and it will continue to look for rivals/controversies to keep its voter base mobilized. With the anti-migrant topic becoming increasingly exhausted (especially during the pandemic), the focus might shift onto other topics such as LGBT rights or conservative values in other areas.