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EU Covid Relief Packet and Rule of Law

The COVID-19 pandemic hit Europe very hard, accumulating more than 45 million positive cases and over a million deaths. Besides health and the overall well being of citizens, the European Union (EU) has been very focused on economic recovery, safeguarding people's jobs, and saving small business and start-ups. Since the start of the COVID-19 pandemic, the EU had been debating on the COVID-19 relief packet and whether or not to make the receival of the packet contingent on the rule of law. This means that countries that are violating the rule of law, or use the funds to violate the rule of law, will not receive funds. The ability to withhold or suspend funds is stated in Article 7 of the EU Treaty. This link was set in place to assure that the funds were not misused. The new law was officialised by a vote in November of 2020 and was set to enter into force in the new year. The Rule of Law is one of the fundamental pillars of the EU. It is enshrined in Article 2 of the EU treaty and over the past few years, the EU has worked on strengthening its definition and setting clear guidelines and frameworks for member states and potential candidates to the EU to follow. The central principles include impartial courts, transparency and accountability, separation of powers, equality before the law, and respect for fundamental rights. The most important concept behind the rule of law is the respect for human rights, a political system rid of corruption, and a highly functioning democratic system.

The European Commission is very focused on reporting and monitoring the state of the rule of law in all its member states. Recently, the Commission instilled a Rule of Law Report to be published annually that monitors developments in its member states. It covers four main pillars: the justice system, the anti-corruption framework, and media pluralism. However, it also monitors other institutional systems and issues. In addition, in the case of a crisis, the Commission applies a Rule of Law Framework. This is where the Commission monitors the development of a country more meticulously, usually to prevent a threat to the rule of law from developing. This framework includes an assessment from the Commission, recommendations, and a follow-up. If nothing changes and the situation continues to deteriorate the Commission may invoke sanctions.

As stated before, the new COVID-19 relief packet requires member states to comply with the Rule of Law. This entails that if the funds are used inappropriately the European Commission has the right to withhold funds. Even though the law went into effect on the 1st of January of 2021, it was immediately suspended. The commission announced that the law would resume when they had appropriate guidelines that member states had to follow. Many members of the EU are upset at this delay, particularly because it affects two countries that are currently under investigation for breaking the rule of law. Poland and Hungary are currently under EU investigation for breaking the rule of law. Hungary is under investigation because the prime minister utilised public spending to advance his interests with the business elites, family, and friends. He reportedly used both state and EU funds. While Poland is under investigation for using the EU's post-pandemic fund to finance their nationalist and eurosceptic strongholds, and regions that oppose it don't receive any funds. Considering the seriousness of these events, the rest of the EU does not want both the countries to obtain billions of euros.

When the bill was voted on, initially Poland and Hungary declared that they would veto, but after a compromise that the law would come into effect after EU judges validated it, they dropped their veto. However, this process could take years, possibly after the national election in Hungary for 2022. Currently, the Commission faces more problems, the European Parliament has threatened to sue if they did not come up with the appropriate guidelines by June 1. They stated that the Commission's role is to be the guardian of EU laws and delaying the application of this law is in direct opposition to their role. Other EU Members are also concerned because Poland has a long history of legal battles with the EU concerning their judicial reforms. For example, on the 6th of May, an EU court ruled that Poland was in violation of EU Law with their new judicial reform that prohibited Polish judges from any political activities, and they are not able to question the political independence of the panel that has the power to penalise the judges. The law received 80 modifications from the opposition all of which were rejected, including an appeal from the EU commission, the executive arm, to temporarily put the legislation on hold.

Poland is set to receive €58,1 billion where €23,9 billion are in grants and €34,2 billion in loans. Hungary is set to receive €7.2 billion in grants. Poland is receiving the 5th highest amount, after Spain, Italy, France, and Germany. It is very important to the EU and its member states that these grants and loans are used for the appropriate reasons, therefore, the EU presented the four main dimensions all member states have to include in their recovery plan Environmental Sustainability, Productivity, Fairness, and Macroeconomic Stability, However, without some sort of clear sanction or punishment these funds can be used for corrupt reasons. The tie to the rule of law together with a clear guideline on its violations and actions against violating member states is paramount for the success of this package.


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