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Recently, European Commission has triggered article 7 against Poland:

The European Commission, the guardian of EU law, said earlier Wednesday it was triggering the so-called Article 7 procedure against Poland because the two laws, combined with several others passed in the past two years, erode the separation of powers, a basic democratic principle.

Romania seems to face similar legislative changes and President Klaus Iohannis is worried that the country might follow Poland's way:

Romania's president says the European Union, after triggering proceedings against Poland for its justice system overhaul, may do so against Romania as well due to its own legal system changes that have sparked widespread protests.

The same source mentions that article 7 triggering may lead to losing EU voting rights:

According to PAP, which did not identify its source, the Commission triggered what is formally known as Article 7, a procedure that could eventually lead to Poland losing its voting rights in the bloc.

I cannot find a source for this, but I have seen on TV that suspending voting rights for a EU member requires unanimity and Hungary is very unlikely to sustain this suspension.

I do not know what Poles think about losing EU voting rights, but I know that most regular Romanians could not care less. However, they are very sensible to losing EU funding for the projects they are involved into (EU funds enabled significant changes from rural development to advanced IT research).

So, I am wondering if under current EU rules, this trigger may also lead to financial losses.

Question: Can EU triggering of article 7 eventually lead to financial loss (EU funds) for the targeted country?

I mean, under current rules (law), can the article 7 trigger can theoretically also lead to financial losses due to less EU funds allocation to that particular country?

  • While there is a good question in there, as it stands, I've voted to close this question as off topic, because it is asking for speculation on a future act. This could be corrected by rephrasing the question, towards asking if the EU has the mechanisms to defund Romania projects, or if that would require an independent action from EU leaders. – Drunk Cynic Dec 21 '17 at 15:53
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    @DrunkCynic - I am not interested in speculating on whether this will happen or not (this is clearly offtopic). I am interested if current EU regulations (laws) allow European Commission to restrict funding for disobedient countries. This is by far a more effective "stick", since regular folks see that their leaders are causing them to lose money. – Alexei Dec 21 '17 at 16:00
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    AFAIK No. But it may lead to less money when the next budget is decided on. – Reinstate Monica - M. Schröder Dec 22 '17 at 6:35
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    @Alexei: Link is fixed. :-) – Reinstate Monica - M. Schröder Dec 22 '17 at 12:35
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    Yes. Many sanctions can be applied including the loss of funding (from the several agreements). Loss of voting rights is actually the most extreme option. In fact I think a proposal for the removing of funds under some circumstances has already been made earlier this year by Germany. – armatita Dec 22 '17 at 20:07
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As of yesterday (2, May, 2018) a proposal for the budget of 2021-2027 was advanced by the European Commission which refers to this subject (among many others).

Before commenting on this I would like to answer your question directly. The Article 7 of The Lisbon Treaty states the following:

Where a determination under paragraph 2 has been made, the Council, acting by a qualified majority, may decide to suspend certain of the rights deriving from the application of the Treaties to the Member State in question, including the voting rights of the representative of the government of that Member State in the Council. In doing so, the Council shall take into account the possible consequences of such a suspension on the rights and obligations of natural and legal persons.

Which means that that any suspension of rights (including access to cohesion funds) would be, in theory, possible. In fact the article specifically mentions the possible loss of voting rights, something considered to be extreme by most.


Many nations in the EU, including France and Germany, had already mentioned their intent in procuring a more explicit tie between rule of law and funds. This was discussed at several events including at the Summit of the Southern European countries, in Rome, where the rise of populism was one of the points on the table (EU Observer article):

We support all initiatives aimed at fostering democracy and citizens’ participation. In this respect, we welcome the idea of citizens’ consultations, all over Europe, on core priorities for the future of the European Union, that could be organised from next spring. In the same spirit, transnational lists of Members of the European Parliament to be elected at European level could strengthen the democratic dimension of the Union.

Considering the joint strength of all nations supporting a reform (the great majority of the EU GDP), it was foreseeable that changes were about to occur. Recently the European Commission proposed a budget for 2021-2027 which states the following:

3. The EU budget and the rule of law: sound financial management

A major innovation in the proposed budget is the strengthened link between EU funding and the rule of law. Respect for the rule of law is an essential precondition for sound financial management and effective EU funding. The Commission is therefore proposing a new mechanism to protect the EU budget from financial risks linked to generalized deficiencies regarding the rule of law in the Member States. The new proposed tools would allow the Union to suspend, reduce or restrict access to EU funding in a manner proportionate to the nature, gravity and scope of the rule of law deficiencies. Such a decision would be proposed by the Commission and adopted by the Council through reverse qualified majority voting.

Reverse qualified majority voting (RQMV) is basically a qualified majority that needs to be approved by the council after it has been approved by the commission. The implication is that no single nation can boycott the decision of the majority (unlike Article 7 which implies unanimity in the Council).

Officially this decision is not targeting any particular nation. In practice this is widely seen as a reaction to the rise of Populism and possible break of the EU Rule of Law obligations by one or more nations. Jean-Claude Juncker mentioned:

The executive, led by Luxembourg politician Jean-Claude Juncker, wants to be able to "suspend, reduce or restrict access to EU funding" in a proportionate manner to protect EU investments and European taxpayers' money.

"Only an independent judiciary that upholds the rule of law and legal certainty in all member states can ultimately guarantee that money from the EU budget is sufficiently protected," the commission said.

...

The move is seen as a way to sanction EU members, notably Poland and Hungary, two countries which the EU has investigated in recent years for curbing the judiciary's independence.

Poland is under the commission's Article 7 probe, with negotiations still ongoing between Brussels and Warsaw on how to come to a political and legal compromise.

However, commission president Jean-Claude Juncker on Wednesday insisted that the proposed measure is not against any member state.

"It's not a Polish question, it is a general question," he told reporters.

So it was not specifically the triggering of Article 7 that led to this (although it might; it's in fact a different process) but the effect was just the same.


You should also be aware that there is already fierce opposition among European MPs to some national leaders, particularly Viktor Orbán. This includes people in its own European political Party, the EPP, which has summoned him quite recently:

...to explain the latest developments related to the Hungarian Higher Education Act and the national consultation “Let’s stop Brussels”.

The EPP itself is currently under strong media and popular pressure to expel, or at least react more adequately, to some of the actions of Viktor Orbán.

I think it's safe to speculate that we haven't seen the end of this story yet.


EDIT: Today the EUobserver released an opinion article from Israel Butler mentioning something I was not aware of and that it is of importance for this answer. One of the initial recommendations about relevant actions against authoritarian actions in EU members was actually made by the NGO Civil Liberties Union for Europe (Liberties):

The European Commission has unveiled two new tools to frustrate aspiring authoritarians in the EU.

The first would allow the commission to block EU funds to governments that bring independent courts under political control.

The commission has packaged this proposal as a technical precaution, as previously suggested by the NGO, Civil Liberties Union for Europe.

...

The commission has announced a second tool to be fleshed out at the end of May: a funding programme on "Justice, Rights and Values", to strengthen fundamental rights, democracy and the rule of law in the EU.

This comes in response to a resolution, adopted by a resounding majority in the European Parliament in April, calling for the commission to create a "European Values Instrument", also an idea elaborated by Liberties.

I think reading their (Liberties) paper or even their executive summary might bring some contextualization into the current state of affairs regarding this situation.


EDIT 2: Hungary and Poland to lose quarter of EU funds (EUobserver)

The European Commission has proposed steep cuts in cohesion support in the next longt-term EU budget to eastern European member states, according to theEU executive's detailed plans on Tuesday (29 May).

Two countries that have caused headaches for the commission over the last years over migration and rule of law, Hungary and Poland, will be hard hit.

Hungary's cohesion allocation will be cut by 24 percent, while Poland will get 23 percent less money in the 2021-2027 period in 2018 prices. The overall cut in cohesion policy will be around 10 percent.

The deep cuts in funds to the countries that are the loudest critics of the EU's migration policy could inflame political tensions among the eastern and western member states.

The commission however argues that the reduction is not a punishment for criticism and that it is misleading to compare funds available per countries, when it calculated the allocation by focusing on regions.

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