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Democracy row poses challenge for EU COVID recovery fund

BRUSSELS (Reuters) - Agreeing the exact conditions on respecting democracy to attach to the disbursement of European Union funds is a key challenge for implementing the bloc’s plan to revive the economy after the COVID-19 pandemic, a top official said on Friday.

FILE PHOTO: European Council President Charles Michel gives a news conference following a virtual summit with European leaders to discuss the situation in Belarus, in Brussels, Belgium August 19, 2020. Olivier Hoslet/Pool via REUTERS/File Photo

European Council President Charles Michel, who chairs EU summits, spoke to Reuters and five other European news agencies after Hungary refused to grant its final approval to the EU recovery plan without guarantees on a linked mechanism on the rule of law.

“There is a difficulty with this topic, it’s not new. But we made a big step on that in July and we must now continue,” Michel said of a deal between the 27 national EU leaders this summer on the economic recovery stimulus.

“When there is a problem, we need to find a solution. And we will find a solution,” he said, without giving details.

Under the deal, the EU’s executive would borrow 750 billion euros ($888 billion) on the market to top up a trillion euros worth of spending under the bloc’s joint budget in 2021-27 to help revive growth.

That still requires approval by the European Parliament, as well as many national, and even some regional parliaments across the EU. The package would also link access to EU funds to respecting democratic principles, which Prime Minister Viktor Orban wants to ensure would not hurt him before granting Hungary’s final approval.

Orban, like his eurosceptic allies in Poland, has long been at loggerheads with the EU over undercutting democracy, and stands accused of undermining the independence of the judiciary, media, academics and advocacy groups in Hungary.

The July agreement was left vague on the rule-of-law conditions to avoid a Polish or Hungarian veto, but the European Parliament wants stronger democratic safeguards.

The question is set to dominate the bloc’s political agenda this autumn, with Spain and Italy that have been hit hardest by the pandemic and hope to secure funds quickly.

“In the end, it all comes down to a question of priorities. Do you want to help southern Europe quickly or do you want an ideal rule of law mechanism?,” said a senior EU diplomat, suggesting the latter was more likely to be sacrificed.

“Given the political realities, it is not very likely that both objectives can be met at the same time,” the person told Reuters under condition of anonymity. “The rule of law will be the most difficult part of the negotiations with the European Parliament.”

Reporting by Gabriela Baczynska, Editing by Timothy Heritage, William Maclean

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