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Economy

Pressure Mounts on Hungary, Poland to Unlock EU Stimulus

December 8, 2020

BRUSSELS — Germany's Europe minister said Tuesday that further delaying the European Union's landmark 1.82 trillion-euro ($2.21 trillion) long-term budget and coronavirus recovery package would be "irresponsible" as diplomats envisage a solution without Poland and Hungary, the two EU states holding up the measure.

Speaking ahead of a video conference of European affairs ministers, Michael Roth said the stimulus is crucial for many European countries whose economies have been devastated by the pandemic. But Poland and Hungary, who agreed on the deal in July, are now vetoing the package because of a mechanism that would allow the EU to cut off funds to countries that violate the bloc's democratic standards. 

Germany, which currently holds the rotating presidency of the EU, has been deploying efforts to find a compromise before a summit of European leaders in Brussels starting Thursday, where the topic will top the agenda..

"The social and economic consequences of the crisis become more visible every day," Roth said, "It would be irresponsible to further delay essential support to our citizens. We need to rapidly unlock the financial support which is so critical for many member states." 

Both Poland and Hungary, which have conservative, nationalist governments, have said they fear the EU mechanism will be used to punish their values. 

If EU leaders fail to adopt the budget for 2021-2027 before the end of the year, the bloc will continue to spend but function on limited resources, with a maximum of one-twelfth of the budget for the previous financial year to be spent each month. Many projects for Poland and Hungary — which are already being formally investigated by the EU for their potential violations of the rule of law — could be held up.

To break the stalemate and ensure that at least part of the money is made available, European officials have been thinking of options that would allow the EU's 25 other nations to launch the recovery plan without Poland and Hungary. A senior EU diplomat who was not authorized to speak publicly said Poland and Hungary need to give a clear indication before the summit that they have changed their minds and are now ready to compromise. 

The diplomat said if there is no "clear signal" from those two nations, then EU officials will move on to Plan B, which could include an agreement by the 25 other nations or moves labeled enhanced cooperation.

Under the enhanced cooperation procedure, a group of EU nations can decide to move forward in situations where all 27 countries are not on the same page. If the standoff continues, such a move could at least help unlock the bloc's 750 billion-euro ($909 billion) economic recovery package.

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