Poland’s deputy PM says deal to end EU budget stand-off in reach

Poland’s deputy prime minister said the EU was close to ending a damaging stand-off over its €1.8tn budget and recovery fund after negotiators proposed a settlement on the contentious new mechanism linking payments to rule of law principles. 

Jaroslaw Gowin told reporters that an accord was within reach between his country, Hungary and the German EU presidency over the dispute, which has pitted Warsaw and Budapest against other European capitals. 

However, diplomats stressed that while progress was being made, the agreement still needed to be formally confirmed by the Hungarian and Polish governments. It must also be acceptable to all the other EU member states and the European parliament. 

Mr Gowin, who heads a junior party in Poland’s ruling coalition, is one of the main moderate voices in Poland’s government, which has been deeply divided over how to deal with the rule of law mechanism. 

“A good agreement is very possible; as [Hungarian prime minister Viktor] Orban said, we are literally a centimetre from working out a good compromise,” Mr Gowin said on Wednesday morning, according to Polish broadcaster TVN24. He said there was now an understanding between the Germany presidency, Warsaw and Budapest and that “I believe that this agreement will also cover the other 24 European capitals”.

If the announcement is confirmed it would provide a significant breakthrough as member states plan for an EU summit that is at risk of being overshadowed by the budget stand-off as well as ongoing EU-UK trade talks. An EU diplomat said: “We are waiting for a final confirmation.”

Both Warsaw and Budapest have objected to a new mechanism that would link payments of EU money to adherence to the bloc’s key legal principles, arguing it unfairly targets their nations. 

EU diplomats said negotiators were drawing up an “interpretive declaration” for the two countries in a bid to provide reassurances over the rule of law mechanism, while stopping short of changing the terms of the legal agreement struck by MEPs and governments. 

The declaration would make clear that the mechanism would apply to the next EU budget from 2021 — and not existing funds. This has been a longstanding demand of Hungarian prime minister Viktor Orban. 

Diplomats said the statement would also reaffirm that a single country could trigger an “emergency brake” over the sanctions process and have the dispute taken up by EU leaders. This element was part of the July agreement struck by member states. 

The statement would also say that the final arbiter of whether sanctions can apply will be the European Court of Justice — reflecting complaints from Poland and Hungary that the mechanism breaches the EU treaty. 

Mr Gowin’s comments come after Mr Orban flew to Warsaw on Tuesday night for talks with the leader of the ruling Law and Justice party and Poland’s de facto leader, Jaroslaw Kaczynski, as well as prime minister Mateusz Morawiecki, and the leaders of Law and Justice’s two junior coalition partners, Mr Gowin and Zbigniew Ziobro.

After the meeting, Mr Orban’s upbeat tone on the likelihood of a deal was echoed by Poland’s government spokesman Piotr Muller, who said after the meeting that Polish leaders were “optimists” about the chances of an agreement.

“We are convinced that there is a chance at this meeting of the European Council — I want this to be clear — of reaching an agreement,” he said. “But by the nature of things, for a compromise the agreement of both sides is needed.”

A delay to the activation of the rule of law mechanism could be particularly important to Mr Orban ahead of parliamentary elections due in 2022. Critics say the authoritarian premier, who took power for the second time in 2010, is keen to fend off any potential impact from the new EU system until after those polls. 

However, there remain significant tensions within the Polish ruling camp about how to proceed. An EU official said there was a hold-up on agreeing the declaration on Wednesday as Poland was attempting to heal a rift inside the government.

Mr Ziobro’s rightwing United Poland party has repeatedly insisted that accepting any rule of law mechanism would be a betrayal of Poland’s national interest.

He said last month that failure to veto this would result in a complete loss of confidence in Mr Morawiecki, prompting speculation that Mr Ziobro’s party could leave the government if Poland dropped its veto. This would deprive the ruling coalition of its majority.

Allies of Mr Ziobro echoed that hardline message after the meeting on Tuesday night. “We are dealing with liars and cheats — in Brussels and Berlin. Therefore the only solution for Poland and Europe is a veto. Dura lex, sed lex — no political declarations can replace laws,” Janusz Kowalski, from United Poland told the Financial Times.

“We cannot agree to the German project on the rule of law mechanism,” he said.

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