The EU and the rule of law crisis: a never-ending story?

by Pietro Sala

Just a few days before Putin invaded Ukraine, triggering a conflict that is posing some serious challenges to the EU, the European Court of Justice (ECJ) had delivered two judgments which are expected to make a difference in another major crisis that the EU has been facing for more than 10 years, the rule of law crisis.

The rule of law is a fundamental value of the EU. As the backbone of all modern liberal democracies, it ensures that all public powers act within the constraints set out by law and under the control of independent and impartial courts. The rise of so-called illiberal governments in countries such as Hungary and Poland led to the dismantling of the check and balances systems of these member states, seriously undermining the rule of law.

This post seeks to explain the main features of the EU rule of law crisis. In doing so, it tries to assess the EU’s reaction to such a deterioration of its values and it tries to portray some possible scenarios for the future, in light of the most recent events, such as the updates on the conditionality regulation and the management of Ukrainian refugees.

The rule of law as a fundamental value of the EU

The rule of law is one of the fundamental values of the Union enshrined in art. 2 TEU. Though there is not a univocal definition of rule of law, the EU has made some efforts to elaborate one, drawing from the case-law of the ECJ and the European Court of Human Rights. The core meaning of rule of law as a European value lies in the principles of legality, legal certainty, prohibition of arbitrariness of the executive powers, effective judicial review, and equality before the law. Therefore, compliance with this value is a fundamental condition for the protection of democracy and human rights.

EU fundamental values also apply to the EU’s external action and to the States wishing to enter the EU. Notably, the rule of law is part of the Copenhagen criteria that candidate States must comply with in order to gain EU membership. Nevertheless, the EU seems more prone to promoting its own values in its external relations than enforcing them within its Member States. This paradoxical situation is known as the “Copenhagen dilemma”: while respecting the rule of law is a condition for joining the EU, once a State is a member there is not an appropriate mechanism to tackle the breaches of this principle. Therefore, this crisis is caused not only by violations themselves, but also by the lack of proper instruments to fix them.

Hungary and Poland as a threat to the rule of law

The supermajority obtained by the right-wing populist party Fidesz in Hungarian elections in 2010 allowed its leader and Prime Minister Viktor Orbán to bring about several constitutional reforms which seriously eroded the independence of the judicial power and the freedom of the media. Similarly, when the conservative party Law and Justice took the power in Poland in 2015, the government implemented measures that increased its control over several state bodies.

Freedom House’s reports have shown how the quality of democracy in Poland and Hungary in the last years has dramatically worsened. In particular, in 2020 Poland was downgraded to “semi-consolidated democracy” and Hungary was labeled as a “hybrid regime”, becoming the first EU state to lose the status of democracy. In 2021, the think tank reported that these two countries had experienced the deepest declines ever recorded by its research, thus attesting that the situation is not getting any better. Without any EU firm action, Warsaw and Budapest’s governments were able to establish electoral democracies and strengthen one-party governments.

Adding instruments to the rule of law toolbox: an assessment of the EU’s reaction

The main mechanism provided by the treaties to tackle breaches of the rule of law is art. 7 TEU but its activation requires unanimity within the Council (at least as far as the sanctioning procedure is concerned). This veto power allows Budapest and Warsaw to protect each other. As a consequence, the EU’s efforts have been focused on finding an effective alternative. In the last years, several tools were thus added to the rule of law toolbox, that is the set of instruments that the EU has at its disposal to tackle the problem of Member States’ non-compliance with the rule of law.

The first reaction to the rule of law backsliding in the EU was the Rule of Law Framework proposed by the Commission in 2014, which took the form of an early warning tool that allowed the Commission to enter into a structured dialogue with the Member State in which the rule of law was under threat. Given the failure of this first mechanism and the aggravating situation, the Commission came up with a new action plan outlined in the Rule of Law Blueprint (2019) and a system of annual cooperation between EU institutions and the Member States called Rule of Law Mechanism (2020).  All solutions had one common limit: they primarily tried to seek dialogue in a phase in which dialogue was not possible anymore. In fact, the timid (or even appeasing) approach of the EU institutions to the breaches put in place by illiberal regimes allowed the latter to consolidate themselves. Moreover, while the EU institutions were seeking dialogue with Warsaw and Budapest, they failed to coordinate among themselves. For instance, rather than supporting the Commission’s Framework, the Council decided to initiate its own annual rule of law dialogue and the European Parliament’s recommendation to establish an EU mechanism on democracy, the rule of law and fundamental rights has fallen on deaf ears.

The approval of Regulation 2092/2020 (rule of law conditionality regulation) gave new hopes that the EU would finally be endowed with an effective tool to fight those threats. The principle of conditionality has always been one of the key principles of the EU’s external action, with the Union making cooperation with third countries subject to the respect of its values. This regulation internalizes such principle by subjecting the disbursement of EU funds to Member States’ compliance with the rule of law and establishing a conditionality mechanism that protects the EU budget. However, the Regulation was watered down by the conclusions of the European Council of December 2021, which made the activation of that mechanism conditional on the finalization of guidelines on the application of the Regulation by the Commission. Plus, those guidelines were subject to annulment actions before the ECJ. Basically, the Member States gave in to Poland and Hungary, which were threatening to block the MFF-NGEU package which was to be adopted jointly with the conditionality regulation.

A never-ending story?

The judgments that the ECJ delivered on February 16th paved the way for the activation of the conditionality regulation. The Court dismissed the annulment actions brought by the Hungarian and Polish governments against the regulation, upholding the validity of the act. In addition, on March 2nd the European Commission published the guidelines on the application of the conditionality regulation, thus satisfying all the alleged conditions that were to be respected in order to activate the regulation according to the compromise brokered at the European Council in December 2020.

At this point, the Commission seems to have no more excuses and can start the procedure, although it has not yet taken any official step in that direction. The use of such a mechanism could be particularly effective at this moment, since Warsaw and Budapest will receive, respectively, grants of up to 23,9 billion and 7,2 billion euros from the Recovery and Resilience Facility. Anyhow, these funds are still frozen since the European Commission has not yet endorsed the Polish and Hungarian National Recovery and Resilience Plans. Even if the conditionality regulation was not enforceable, the EU found in the approval of the National Plans another leverage through which to enforce the rule of law in the two countries.

However, the ongoing war in Ukraine is likely to play in favor of Poland and Hungary. As a matter of fact, these states share the border with Ukraine, and the UNCHR reports that as of 27 March Poland already took in more than 2 million refugees out of the 3,6 million persons who fled Ukraine. The fear is that the efforts in the reception of Ukrainian refugees could become an alibi to overlook the rule of law problem in these countries.

Finally, parliamentary elections will take place in Hungary in April (on the same day a controversial referendum on LGBTQ+ issues, which critics call homophobic, will be held). Their outcome is still uncertain, but allegations of manipulated elections have already been made. Although Orbán and his Fidesz party will face their toughest challenge since 2010 (a six-party alliance running against Fidesz), an alternation in power cannot be taken for granted and we might still have to deal with Orbán’s illiberal threats. The EU should be ready.

No more compromises: the EU must act now

Now that the validity of the conditionality regulation has been upheld by the ECJ, there is new hope that the EU will eventually be capable to face the threats to the rule of law. However, the Commission has not yet taken any action to activate the mechanism and there are some concerns that it may decide to turn a blind eye to Warsaw and Budapest’s illiberal drifts considering that they are at the forefront of receiving Ukrainian refugees.

Although reforming the rule of law toolbox might be desirable in the long run, what is now needed is strong political will and a coordinated response by the EU institutions, which must acknowledge unambiguously that some Member States are experiencing forms of democratic backsliding. Both Member States and EU institutions should not compromise on the rule of law and ought to take a clear stance in this crisis now, discouraging other Member States to take the same path as Hungary.