Poland Warns Sovereignty at Risk From EU’s Rule-of-Law Probe

  • European Commision forces trying to break up EU, Szydlo says
  • Government rejects EU probe into state of Polish democracy

Poland’s government defended the nation’s sovereignty, saying the European Union’s executive wanted to break the bloc apart after officials in Brussels threatened to deepen a probe into whether the country is backsliding on democracy.

The European Commission is preparing to extend its first ever investigation into an EU member’s adherence to rule of law over concerns that an overhaul of Poland’s top court has undermined the country’s standing as a democratic state. Prime Minister Beata Szydlo and the ruling party on Friday passed a parliamentary resolution to defend the largest eastern EU nation’s sovereignty, saying it was under the biggest threat since the country regained independence following the 1989 fall of communism.

Beata Szydlo.
Beata Szydlo.
Photographer: John Thys/AFP via Getty Images

“In the European Commission there are increasingly more of those who want to break the EU apart,” Szydlo told lawmakers in Warsaw on Friday. “Unlike any other time over past 27 years, Poland needs sovereignty.”

The standoff coincides with intensifying bickering within the 500 million person economic and political bloc over how much influence the EU should have over its individual states. The U.K. is five weeks away from holding a referendum on whether it should stay in and other members are at odds over issues ranging from refugees to bailing out Greece, while Poland and Hungary are eschewing guidance on rule of law.

Investors have taken notice, with the premium they demand to hold Polish 10-year zloty government bonds over equivalent German bunds rising to a two-year high this month.

Court Questions

Former U.S. President Bill Clinton said this week that Poland and Hungary are each leaning toward a “Putin-like” and “authoritarian dictatorship.” Investors have started to react. The commission is only doing its job of making sure EU governments stick to the membership treaty and uphold rule of law, European Commissioner Guenther Oettinger said during a visit to Poland on Friday.

“There are no problems inside the EU Commission,” Oettinger said. “There are functions and obligations. The Commission is part of the EU, as the Polish government is part of the European Council.’’

The zloty has declined 3.6 percent against the euro this year, the biggest loss among the currencies of Poland’s eastern EU peers. The yield on Polish 10-year debt has jumped to a two-week high of 3.08 percent on Friday, from 2.59 percent when Law & Justice won elections last year.

S&P Global Ratings handed the country of 38 million people its first ever credit-rating downgrade in January. Fitch Ratings said in a statement on Wednesday that the six-month-old government’s “more confrontational” style is heightening political and fiscal risks as it splits society, weakens ties with Europe and hinders the outlook for economic growth and investment.

The standoff with the EU was triggered by a revamp of the Constitutional Tribunal that makes it harder for the court to overturn laws passed by the government. While the court itself ruled the overhaul was illegal, Szydlo’s administration has refused to publish the ruling -- thus preventing it from taking effect. President Andrzej Duda, a former Law & Justice member, hasn’t sworn in three justices picked by the previous parliament, opting instead to name judges selected by his party colleagues to the tribunal.

Szydlo’s government rejected criticism from abroad as Law & Justice lawmakers passed the non-binding resolution “in the defense of sovereignty of Poland and the rights of its citizens.” The country will “never bend to ultimatums” and Poland “doesn’t have a reputation problem, but the EU does,” Szydlo said on Friday.

“Poland needs the EU, and most more importantly the EU needs Poland,” Szydlo said. “I’m a European, but before all, I’m a Pole.”

Before it's here, it's on the Bloomberg Terminal. LEARN MORE