Debate: Application of Regulation  /, the rule of law conditionality mechanism
Date: THURSDAY, 11 MARCH 2021
Speaker: Johannes Hahn
Language: EN

For the first time, the Union has a specific tool to protect its budget from breaches of the principles of the rule of law, such as compromising the independence of the judiciary, and this confirms our position as a frontline defender of the rule of law. The regulation allows us to reinforce the protection of the Union budget and the financial interests of the Union. The measures that can be adopted under the regulation include, for instance, the suspension and termination of payments, as well as the prohibition of new legal commitments and financial corrections.  These are potentially very serious consequences, and the mechanism bestows significant responsibility on the Commission and on all of us. That is why we absolutely need to get it right. We will assess alleged breaches in an objective, impartial and fair manner. The measures we propose to the Council will respect the principle of proportionality. The procedure will also ensure full protection of the rights of defence of the Member State concerned, including the right to be heard by the Commission. At the same time, it’s of the utmost importance that the legitimate interests of beneficiaries and final recipients are protected. Under the regulation, the imposition of measures does not affect Member States’ obligations towards beneficiaries and final recipients. I remember this was one of the key discussions during the final negotiations on this subject. I can reassure you that the Commission will provide information and guidance for their benefit.  The regulation has been in force and applicable since 1 January 2021 and is enforceable from that date. All relevant breaches affecting the sound financial management of the Union budget and the financial interests of the Union after that date will be covered. No case will be lost. The new mechanism complements a whole range of existing procedures to protect the Union’s budget, including the European Anti-Fraud Office (OLAF) and, hopefully soon, investigations by the European Prosecution Office (EPO). Those procedures will be used if they are more effective with regard to protecting the Union’s budget. Should the conditions for applying the mechanism be fulfilled, the Commission will open proceedings. The Commission is currently preparing guidelines for the application of the regulation. At the same time, the Commission is actively assessing information from sources cited in the regulation to identify possible breaches of the principles of the rule of law that would be relevant under the new regulation. When concerns arise, discussions with Member States will commence without undue delay.  We want to get it right, with solid and predictable guidance. We want to establish fair, transparent and proportionate practicalities for this new mechanism. To exercise our very strong ambition on the rule of law mechanism, our approach needs to be watertight. Should the validity of the regulation be challenged before the Court of Justice – by the way, there is time to do so, until 15 March – the guidelines will take into account the Court’s judgement insofar as relevant. Taking into account the European Council conclusions of December 2020 and its own declaration, the Commission does not expect to propose measures under the regulation before adopting these guidelines. Parliament will be an important partner in the implementation of the Rule of Law Conditionality Regulation. First, the Commission will inform Parliament each time it initiates the procedure, as well as on any appropriate measures proposed, adopted or lifted by the Council. Second, Parliament has the possibility to invite the Commission to a formal structured dialogue once the Commission has initiated the procedure. On the application and effectiveness of the regulation as a whole, the Commission will report to Parliament by January 2024. As we develop this new instrument, the more established parts of our toolbox remain in action. The Commission continues to operate its early detection and exclusion system, it continues to assess the internal control systems of the Member States, it audits expenditure and operates financial corrections where applicable, and it protects the final interests of the Union, as established by the regulation establishing the recovery and resilience facility. The Commission is strongly committed to continue using its entire arsenal and to make sure that every euro from EU taxpayers goes where it is really needed. If you will allow a very personal comment, I’m in my third mandate here and, since 2010, when I took office within the Commission, we have been discussing exactly this subject because the Barroso II Commission started with the new Lisbon Treaty and we very soon detected that Article 7 was not sufficient enough. I remember very well that my then colleague, Ms Reding, was looking at measures which could accompany this Article 7 possibility. Finally, in 2018, we as a Commission took the decision to propose a new multiannual financial framework (MFF) for the current period, which included, for the first time, such a regulation. I want to reassure you that I am very much committed to this after all the history I have witnessed on a very personal note.  But we have to do it in such a way that we are not challenged successfully with the first case at the Court of Justice. We have to do it in such a way that finally we are altogether successful and this instrument turns out to be a successful and, may I say, visible and relevant tool in order to pursue the rule of law, not only in spirit but in behaviour.