Here's some extended copy from The Economist To prevent diplomatic shakedowns, Europe must curb abusive national vetoes
Their idea is have a budget-based stick to, in exceptional cases, disallow vetoes that are otherwise available: "OK, you get your veto, but we all agree you're abusing it, so we're cutting you out of cash elsewhere".
But not included in the rulebook’s 600-plus articles is a mention of an edict that arguably holds sway over all eu business. Some say it does not exist anymore, others that it never really did; Eurocrats speak of it in hushed tones, as if mindful not to wake a monster. The Luxembourg Compromise holds that any national government can single-handedly derail any eu measure if it feels its “vital interests” are threatened. According to the rules, in most instances if enough member states agree, they can impose their will on a recalcitrant few. In the real world, the compromise suggests, a strong enough squeal from any one national government is enough to stall even measures agreed by the other 26 and eu institutions, rules be damned.
The existence of any national vetoes enrages federalists who fret that selfish local politicians stand in the way of a functional European superstate. Those complaints can mostly be ignored. Vetoes are seldom a real problem. They often reflect legitimate gripes and accommodating them improves eu policies in the end. Abolishing them would cause too much power to seep away from national leaders, whose democratic legitimacy far outweighs that of little-known meps or commissioners. On September 20th a meeting of the bloc’s Europe ministers looked at ways to veto-proof more of the eu’s business by increasing the use of qualified-majority votes. But because the proposal to move away from unanimity itself requires unanimity, it is unlikely to go anywhere.
That leaves the eu with an enduring problem. Hungarian-style exploitation of vetoes is patently beyond the use that was intended for them. Thus a new rule is needed: call it the Reverse Luxembourg. The original Luxembourg Compromise holds that in situations where vetoes are usually forbidden, they can be revived in exceptional circumstances. The Reverse Luxembourg offers that in situations where vetoes are usually allowed, they should be barred in similarly rare circumstances. The Luxembourg Compromise protects against federalist overreach. The Reverse Luxembourg would protect Europe from diplomatic blackmail.
As with the original compromise, there is no need to codify the Reverse Luxembourg in any treaty. More efficient would be to punish the use of flagrantly abusive vetoes with cuts in eu money sent to countries that deploy them. Such threats work: Hungary is currently scrambling to update its anti-graft laws to avoid losing up to €7.5bn ($7.4bn) of funding from Brussels. The eu regularly comes up with new spending programmes, for example the €750bn pandemic-relief fund set up last year. It is easy to devise such schemes for 26 countries instead of 27: similar workarounds were once deployed to get around Britain in its most cantankerous years as a member of the club. Hungary (along with Poland) is currently not receiving any of the pandemic cash, specifically because of its rule-of-law shortcomings. Spelling out that member states shall not use their veto to hijack the bloc’s business could be made an additional criterion for receiving eu largesse.
Now, I have to add that really taking away vetoes would be a tricky thing. The EU is meant as a supra-national entity, not a super-state. In the good old days, the UK would often be the last holdout to keep the EU from enacting some bizarre Franco-German over-reaching scheme.
Formally taking away vetoes would given plenty of substance for Eurosceptics to grip about, much above the rather tame fare the Brexiters were bandying (the rather dismal failure of Brexit makes it a good moment to clean up house somewhat though - even populist parties tread more carefully re. Euroscepticism lately).
Best have a system assuming that member states are fully responsible grown ups, with veto rights. But have an informal backdoor penalizing excessively obnoxious behavior.
For now, Hungary is somewhat weakened in that its usual wingman, Poland, is so dead-set against Russia that it may not acquiesce to all Hungary's excesses.
In general however, it does seem like Europe isn't particularly well-equipped to deal with national governments that slip into autocracy, especially when two or more exist at the same time and can watch each other's backs.
p.s. I am quoting this because it seems on-point and relevant, not because I certify that this is legally and politically feasible.