Covid-19 Stimulus Package Finally Approved By EU Leaders After Veto Lifted By Hungary And Poland

The European Union has finally ended the impasse over the much-needed stimulus package for Covid-19 which means that access to a historic level of funding will soon be available for cash-strapped countries.

In July, the European countries agreed to raise 750 billion euros ($908 billion) from public markets in the wake of the coronavirus pandemic, and then distribute that money to help in the economic recovery throughout the region and for all the 27 member states. That amount was announced over and above the 1.074 trillion euros ($1.3 trillion) package that the block had announced would be spent between 2021 and 2027.

However, after Hungary and Poland vetoed the plan of linking the disbursements of the funds with compliance of European values – which is also known as the rule of law mechanism, the implementation of the agreement was at threat. Investigations against both the countries have been ongoing for long over allegations of influencing appointments of top judges and trying to impede press freedom. These actions go against European law.

The link was finally agreed to be implemented between the 27 EU countries after “long negotiations” over the last few weeks. However the EU also allowed a caveat to be included according to which the two countries have been allowed to seek an opinion from the European Court of Justice, the judicial body of eh EU, so that it can cast a ruling on whether the disbursements of funds be made conditional on respecting the rule of law and the European treaties.

But according to experts, more than a year is likely to be taken by the ECJ to come to a decision which means that no actions on the issue will be taken against the two countries. This is especially important for Hungarian Prime Minister Viktor Orban as he would be facing elections in 2022.

While the latest arrangement appears to be complex, it will allow the EU to proceed with distributing the funds quickly. At the same time, the disbursement also will be bound by respect for European values.

The compromise allowed the EU to “avoid arbitrary and political motivated decisions”, said Poland’s Prime Minister Mateusz Morawiecki while speaking in Brussels on Thursday.

The deal was a “victory of common sense”, said Hungary’s Prime Minister Viktor Orban.

But some doubts about its legality and effectiveness of the deal has been raised.

“You cannot save the Rule of Law by breaking the law,” Guy Verhofstad, a European lawmaker, said on Twitter.

Before the funds disbursement becomes official practice, it has to be approved by lawmakers at the European Parliament.

“Hungary/Poland lift their veto on EU budget, after being reassured that new Rule of Law mechanism won’t be applied to them until a judgment of ECJ will define ‘methodology’ to be applied. This is not only unprecedented, but also legally questionable,” Alberto Alemanno, professor of European law at H.E.C. Business School in Paris, said on Twitter on Thursday.

(Adapted from CNBC.com)



Categories: Economy & Finance, Geopolitics, Regulations & Legal, Strategy, Sustainability

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