Inside the EU Rule-of-Law Deal That Freed $2.2 Trillion in Cash

European Union leaders salvaged a historic $2.2 trillion budget and stimulus package in a breakthrough deal with Poland and Hungary this week, just as the bloc’s economies risk being ravaged further by a new wave of coronavirus infections. The German-brokered compromise convinced the two eastern nations to abandon their veto, which they had threatened to use over their opposition to tying cash to whether members adhered to the rule of law. But Budapest and Warsaw won a concession that will delay the rollout of the tool to target rule-of-law breaches.

Last month Germany, on behalf of EU member states, reached an accord with EU lawmakers to tie disbursements from the bloc’s budget and stimulus plan to democratic standards. The new rules, which are due to be formally adopted next week, give the European Commission the power to propose the suspension of payments to countries that undermine judicial independence or fail to prosecute corruption. That means Hungary and Poland, which have been accused of such breaches, could stand to lose tens of billions of euros in EU funds. A proposal to suspend funding by the EU’s executive arm would be subject to approval by a weighted majority of member states.