Illiberal democracies veto European stimulus package

It had taken long sleepless nights of negotiation to reach a compromise and a stimulus qualified of “historical” by most. Such stimulus would have been the first issuance of European debt but now faces delay and potential abandon as Brussel starts looking for alternatives.

Written by Nicolas Guignard

The 750bn € recovery plan (and the 1100bn € 7-year budget) proved a strong point of contention last July between the four ‘frugal’ states (Denmark, Sweden, Austria and the Netherlands) and the PIGS (Portugal, Italy, Greece and Spain). The former argued that the latter had failed to reform their system (countless engagements in this direction were taken in the aftermath of the subprime and European debt crisis), failed to reduce their structural deficit and most importantly had poorly handled the pandemic. Who else to blame but themselves for the dire state of their health infrastructures, their slow response to COVID-19 and the dreadful economic consequences that ensued? Nonetheless, an agreement was reached after the southern countries agreed to further concessions, and the stimulus package was both delivered under the form of a mutualized loan (not subventions) and tied to the respect of the ‘rule of law’.

This last point created the most friction, not with Italy or Spain, but with Hungary and to a lesser extent, Poland, the latter benefiting hugely from the stimulus. Those former members of the Eastern bloc have been admitted into the EU in 2004, along with a large number of former USSR satellite states. The EU has consistently failed to prevent the slow and steady dismantling of the rule of law in both countries, from the end of the separation of powers in Poland to the muzzling of the press in Hungary. Both have become epitome of ‘illiberal democracies’

Warsaw and Budapest argue they would have to give up their ‘sovereignty’ in exchange for Brussel’s billions. In their opinion, internal matters are none of the EU’s business, thus they vetoed the stimulus on Monday November 16th. Other European states believe that since they are creditors, they ought to have a say in the way debtors are governed. Let the reader be reminded that to enter the EU, several prerequisites exist among which the respect of the rule of law.

Both Poland and Hungary face an ‘article 7’ procedure, which may deprive them of their voting rights. This, however, necessitates unanimity from all EU members (excluding the country targeted by article 7), which would require to break the unspoken alliance between Orban and Morawiecki on rule of law matters.

In the meantime, the stimulus is delayed, and its execution is suspended to the successful conclusion of further negotiations. Such failure further highlights the fragility of the EU, its inability to face any crisis as long as member states are divided and should further convince some of the most Europhile countries of the necessity of concentric circles of governance within the Union.

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