Since 2004, when the European Union was enlarged to include many of the former communist states of Central and Eastern Europe, its regional funding mechanism has been heavily geared toward ameliorating economic inequalities between old and “new” member states. To ensure cohesion within the EU, overcoming disparities between countries and improving trade, transport, and communications infrastructure throughout the bloc have long been seen as critical.
The EU’s cohesion policy is in fact its most visible initiative. Investments made through the Cohesion Fund promote regional development, support innovation, improve education, and expand digitalization and transport networks, and sustain programs that improve the single market by boosting growth, productivity, and specialization. The cohesion policy benefits citizens, local communities, and businesses across the EU, but particularly in newer member states.
The Cohesion Fund’s next seven-year budget will run from 2020 to 2027, and the European Commission will offer proposals for how it should be allocated in early May. The negotiations over those proposals are expected to be fierce. For one thing, several new priorities have come to the fore in recent years, not least the need for stronger border protection, a system to manage migration, and more joint defense projects.
Complicating matters further, EU leaders hope to keep spending at current levels even after the United Kingdom’s withdrawal from the bloc next spring. And once spending priorities are agreed upon, the European Parliament will still have to approve the final budget.
But arguably the most important political development since the last budget negotiations in 2014 – more important than refugee inflows or Brexit – has been the emergence of illiberal, right-wing populist governments in Hungary and Poland. Under the 2014-2020 cohesion budget, which totaled over €350 billion ($424 billion), Poland and Hungary received €77 billion ($93 billion) and €22 billion ($26 billion), respectively, making them the largest and fourth-largest net beneficiaries of EU funds. And net budget contributors such as Germany, France, and the UK, it should be noted, heavily subsidize this largesse. And yet, rather than embracing the values that have inspired such generosity, Poland and Hungary’s authoritarian-minded governments have been actively undermining the rule of law and dismantling their judicial systems. If either country were to apply for EU membership today, their bids would be rejected. Both governments have cracked down on nongovernmental organizations and targeted or co-opted the media. Still, in what remains of Hungary’s free press, one can sometimes find credible reports alleging that Prime Minister Viktor Orbán and his cronies are pillaging EU funds to benefit themselves, their families, and their business associates. In fact, Orbán’s government has been the subject of a number of investigations by the European Anti-Fraud Office.
Despite such behavior, Orbán was re-elected earlier this month, and his Fidesz party, in alliance with the Christian Democrats, now holds a two-thirds parliamentary majority – enough to amend the constitution. During the election campaign, Orbán’s government saturated the country in xenophobic, anti-Semitic propaganda. According to election monitors from the Organization for Security and Cooperation in Europe, the vote “was characterized by a pervasive overlap between state and ruling party resources, undermining contestants’ ability to compete on an equal basis.”
Meanwhile, Poland’s ruling Law and Justice (PiS) party is currently under investigation by the European Commission for serial breaches of EU rule-of-law standards and infringements on judicial independence. It is unacceptable that EU taxpayer money is being used to prop up the vanity projects of illiberal elites who show no compunction about undermining the democratic institutions that make the EU what it is. From 2020 onwards, it is critical that cohesion funds be disbursed on the condition that recipient member states uphold and enforce the rule of law.
To that end, the EU should introduce an objective procedure to monitor compliance and freeze funds when necessary. For example, if Article 7 of the Treaty on European Union is triggered against a member state for violations of the rule of law, all funds allocated to that country should be placed into a reserve fund. And until the Article 7 procedure is suspended or reversed, those funds should be redirected to support universities, research institutions, and other civil-society groups in that country.
This approach would demonstrate to the citizens of wayward countries that the EU does not want to punish them for their governments’ behavior. And it would give those governments a much stronger incentive to comply with EU rules and uphold the shared values that allow the single market to function properly.
The sad reality is that illiberal governments, such as those now in power in Poland and Hungary, are more than happy to take EU money while rejecting EU values. It is time to demonstrate that contempt for EU norms carries a price.