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EU commission says it will cut funds for member states that undermine rule of law

BRUSSELS (Reuters) - The European Union aims to cut funds paid out to member states that undermine courts and the rule of law, the bloc’s executive said in proposing a joint budget for 2021-27, a move that could cost Hungary and Poland millions of euros.

European Union flags flutter outside the EU Commission headquarters in Brussels, Belgium, May 2, 2018. REUTERS/Francois Lenoir

Eurosceptic nationalists who have come to power in some former Communist states of eastern Europe have clashed with Brussels over what the EU describes as curbs to freedom of the media and violations of other democratic norms.

The EU has so far found it difficult to punish them. Its main disciplinary mechanism, Article 7 of the European treaty, requires unanimity among the other member states.

Brussels has already invoked that procedure against Poland over measures by the government to exert authority over judges. But the threat of a Hungarian veto makes it unlikely sanctions will be imposed such as suspending Warsaw’s voting powers.

Still, the EU’s executive commission says it can cut off some funding from the bloc during the process of drafting a six-year budget. Poland and Hungary are two of the biggest net recipients of EU aid, each receiving billions of euros from Brussels each year.

The commission did not specify how much of that funding might be in jeopardy, saying only that any measures taken would be proportionate to the threat a country’s actions posed to the rule of law.

“European taxpayers’ money cannot be used in a member state that doesn’t respect the rule of law,” said the bloc’s Justice Commissioner Vera Jourova, noting that Warsaw and Budapest would fall under the procedure had it been in place now.

The commission has so far limited its proposed financial punishment to issues of rule of law and judicial independence, rather than broader issues such as free speech and democratic values, to avoid further politicising the disputes.

“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 rule of law link to EU handouts will be among many battles the bloc’s national governments will now fight over the Commission’s budget proposal.

Poland said the road to a final deal on the budget was “still very long.”[nW8N1LB02F]

A Hungarian government spokesman dismissed the proposal as merely a “hypothesis”.

Additional reporting by Anna Koper and Marcin Goclowski in Warsaw, Luiza Ilie in Bucharest and Gergely Szakacs in Budapest; Editing by Peter Graff