Debate: The creation of guidelines for the application of the general regime of conditionality for the protection of the Union budget
Date: TUESDAY, 6 JULY 2021
Speaker: Johannes Hahn
Language: EN

This Regulation is an historic achievement for the Union and it applies since 1 January 2021 and has been followed up from that date, and may I recall that it was the Commission’s proposal in 2018 to have such an instrument. Again, I am grateful for all the support at least we received in this House before the European Parliament elections, but also afterwards.  Having said this, again I can only recall that all relevant breaches that affect or risk affecting the sound financial management of the Union budget and the financial interests of the Union after that date will be covered. As said already in the past, no case will be lost. The Commission has been actively working to assess information from all sources in view of building up a robust case, robust cases, and initiating the procedure under Article 6 of the Regulation. Notification letters will be sent without any delay as soon as we have gathered concrete evidence that the conditions required by the Regulation are fulfilled.  The Regulation requires the Commission to provide guidance for the benefit of final recipients and beneficiaries whose rights have to be ensured, and on this we very much agree. As you know, our draft guidelines include such guidance. The guidelines also explain the procedure and the way the Commission will assess cases under the Regulation. I fully agree with your report that the guidelines cannot and will not change the law as set by the Regulation, but only clarify how the Commission will apply it.  The Regulation requires a sufficiently direct link between any rule of law breach and risks for the sound financial management of the Union budget or the financial interests of the Union. Thus, a sober assessment of the following is therefore needed. The Commission should assess whether a rule of law breach affects or seriously risks affecting the principles of sound financial management or the financial interests of the Union in a sufficiently direct way. It may also need to assess whether the non-compliance with sound financial management principles arises from rule of law breaches in a sufficiently direct manner.  If a sufficiently direct link with the budget cannot be established, the Regulation will not apply. However, other tools of Union law may apply instead, for example infringement procedures or the famous Article 7 procedures. I would like to recall in particular that systematic or serious breaches are covered by the Regulation but that a general indirect or merely theoretical effect on the budget is not enough to trigger the Regulation. The Commission must be able to demonstrate an identified or identifiable effect or risk for the budget.  The Regulation also requires the Commission to apply the Regulation in a complementary way. Thus the procedure under the Regulation will be opened when the substantive conditions described before are met, unless the Commission finds that other procedures provided by the Union’s Financial Sector Regulation allow it to protect the budget more effectively than the General Conditionality Regulation. For instance, existing procedures to protect the Union’s financial interests, including those involving investigations by OLAF and EPPO, as well as measures provided under the sector-specific financial rules, may be more effective and should be used instead.  The Regulation finally requires the Commission to define the most appropriate and proportionate measures to be proposed to the Council by evaluating the impact of the rule of law breach on the budget, taking into account all relevant factors.  Honourable Members, the Commission has received your letter calling for a full and immediate application of the Regulation. You choose to pursue this path and of course the Commission will react appropriately within the timeframe foreseen by the Treaties. I will already state here that the Commission has ensured proper application of the Regulation since the day it entered into force. We have done so along two main strands.  Firstly, through the guidance on which you are consulted and that we are discussing today; secondly and most importantly, through the building up of the cases, which requires a well-formed, thorough, methodical and analytical assessment of the available information. For example, one of our sources in this context, the Commission’s annual rule of law report, will be presented later this month. All this analytical work may soon materialise, demonstrating further the determination of the Commission to apply the Regulation in order to ensure an effective protection of the budget against breaches of the rule of law.  In doing so, the Commission will of course continue to take into account the views of Parliament and this is also the reason why we are waiting for Parliament’s comments on the guidelines under consultation, and be reassured once again, as Mr Sarvamaa said, I think we are strong allies and I think we are also allies in the way that we want this instrument to become a success story in a way that indeed it can help to address successfully and sustainably rule of law breaches and correct different and several developments in some of our Member States in a way which we intend to see, at least here in the Hemicycle, by a huge majority. So be reassured. We will act, but we will act in a way that finally we are successful. I think this is in all our interests.