Suspension of EU funds for breaches of the rule of law – a dose of tough love needed?

Over the past years, observance of the rule of law has declined in some Member States of the EU. Problematic in view of the founding values of the Union, the phenomenon also impedes the functioning of the EU legal order, as well as the proper use of its funds by the Member States concerned.

It is against this background that the European Commission has proposed a regulation ‘on the protection of the Union’s budget in case of generalized deficiencies as regards the rule of law in the Member States’. Based on the notion that respect for the rule of law is an essential precondition to secure the protection of the EU financial interests, the proposal foresees that EU institutions could suspend EU financial transfers to a Member State in case of ‘generalized deficiencies as regards the rule of law’.

The present analysis examines the core elements of the Commission’s initiative, as amended by the European Parliament. While acknowledging the need and the EU competence to introduce such a conditionality mechanism, the authors are more critical of some aspects of its potential operationalization:

• Lack of precision concerning the premise for applying the rule of law conditionality.

• Omissions regarding the regulation of the measures to be imposed.

• Legal doubts about the procedure – reverse QMV – of imposing sanctions.

• The risk of permanent loss of EU funds.

• Weak legal protection for the beneficiaries of EU funds.

Armin von Bogdandy is Professor and Director at the Max Planck Institute for Comparative Public Law and International Law in Heidelberg.

Justyna Łacny is Professor at the Warsaw University of Technology, Department of Administration and Social Sciences.