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EU vows deal to unlock Poland’s pandemic cash hinges on reforms

The European Commission has endorsed a plan paving the way for Poland to unlock billions in post-pandemic funds — despite little concrete movement yet on the rule-of-law concerns holding up the money.

The EU’s pandemic recovery fund was not originally designed as a tool to police the bloc’s democratic norms. But it became just that over the last year as Brussels refused to OK Warsaw’s plan to spend roughly €36 billion in grants and loans — part of the bloc’s €800 billion recovery fund — due to concerns over judicial independence and the country’s failure to implement rulings from the EU’s top court. 

The war in Ukraine has changed things, however, temporarily transforming Warsaw’s image in Brussels from rule-of-law troublemaker to constructive partner. And France’s desire to finalize a global minimum corporate tax rate — blocked by Poland — gave the Commission extra impetus to strike a deal. In Poland, meanwhile, Russia’s invasion has offered a reminder that Poland needs its Western partners — and that extra EU cash helps when costs suddenly spike. 

Notably, the compromise agreement, seen by POLITICO, will not immediately give Poland access to any cash. 

Instead, it essentially creates a pay-for-performance plan, giving Poland “milestones” it must hit to get each successive tranche of its stimulus money. Still, the text shows the Berlaymont has limited the scope of its demands. 

The College of Commissioners approved the move on Wednesday, with two commissioners opposing the decision and three commissioners sending letters of concern, according to multiple officials familiar with the discussion. Economy Commissioner Paolo Gentiloni insisted the milestones will be taken seriously.

“We will assess this fulfillment very very strongly,” he told reporters.

Poland, for its part, is moving to make legislative changes it claims will help reach some of those milestones. But rule-of-law advocates are already warning that the proposed reforms are merely cosmetic and fail to eliminate the structural threats to judicial independence. 

Either way, the deal reflects how war has complicated the EU’s efforts to enforce democratic standards. Faced with the need to speed along fraught decisions on everything from sanctions to weapons, many capitals and European officials have prioritized unity above differing opinions — just as they did this week when giving rule-of-law troublemaker Hungary an exemption in order to push through a Russian oil embargo. 

What’s in the deal?

The holdup with Poland concerns conditions Brussels unveiled in October, aiming to guarantee an independent judiciary within the country — and address a critical ruling from the EU’s top court. 

The conditions included dismantling a controversial disciplinary body for judges, ending or reforming a disciplinary regime for judges and reinstating judges suspended under the system. The Court of Justice of the EU declared the disciplinary regime illegal in July and later imposed a daily €1 million fine when Warsaw failed to suspend the system.

The recovery fund agreement references these issues. 

Poland, it says, will have to make changes “strengthening the independence and impartiality of courts” and will be required to “remedy the situation of judges affected by the decisions of the Disciplinary Chamber.”

The deal also includes a list of necessary changes within these areas. 

It calls for disciplinary cases involving judges to be “examined by an independent and impartial court.” And it demands that judges disciplined under the current system be granted “access to review proceedings of their cases” and have their cases adjudicated by the end of 2023 — a compromise that opens the door to some judges being reinstated without guaranteeing that they will get their jobs back. 

Under the deal, Poland has until the second quarter of this year is finished to adopt the judicial reforms and implement a process to resolve the cases regarding disciplined judges. Notably, it says the changes have to be done “before the first payment request is submitted to the Commission” and will be “a precondition for any payment.”

In theory, that means Poland can’t ask for any recovery money until the country meets specific Commission demands. And it won’t just be the Commission determining whether Poland has reached its milestones — a majority of countries will also have to sign off on any Polish funding requests. 

“If the milestones are solid, they can’t touch any money before they do anything,” an EU diplomat said. 

While Poland’s plan has received especially close scrutiny, each EU country had to create its own roadmap for Commission approval. Each one contained a detailed list of proposed investments and reforms, as well as the evidence capitals would provide to unlock each funding round. 

Upon approval of these plans, most countries received 13 percent of their funding envelope upfront. But that’s no longer an option for Poland, which missed that deadline.

What’s next? 

The plan now goes to the Council of the EU, where a qualified majority of countries must endorse the Commission’s approval.

Countries that have taken a hard line on respect for the rule of law, like the Netherlands and the Nordic countries, are unlikely to have the numbers to block the plan. Still, some might abstain or vote against approving the deal, one diplomat said. That would be unprecedented, as all other countries got unanimous thumbs ups from their peers.

France will welcome the move to unblock Poland’s funds. Paris is hoping to clinch an EU consensus on a minimum global corporate tax base before its time atop the EU presidency ends in July. 

Poland, the only remaining holdout, has denied the two issues are linked, but EU officials maintain that all reservations on the issue have been addressed. They expect Poland to drop its opposition once the recovery plan is approved.

The Commission’s move to greenlight Poland’s plan has shocked legal experts and the Polish government’s critics, who say the country’s suggested legislative changes fail to remove the core threats to the country’s judicial system. 

Laurent Pech, a professor of European law at Middlesex University London, said the current bill being considered only touches on 10 percent of what the EU court mentioned in its July court ruling. 

“It’s a joke, it does not even come close to guaranteeing compliance with the ruling,” he told POLITICO.  

Experts also criticized the Commission for appearing to make adopting EU court orders a “milestone” to be achieved. Complying with court orders should be mandatory, they argued, not part of an incentive process.

“The Commission is irresponsibly redefining its mission as guardian of the treaties by making compliance with ECJ rulings an à la carte process,” Pech said. “Respect for the rule of law cannot be a milestone to be reached.”

Officials insist Poland is not off the hook. 

“The recovery plan is basically a promise to do reforms,” one Commission official said. 

Within the Berlaymont, however, some officials are warning Commission President Ursula von der Leyen that her team must work to counteract the public perception that Poland will get its money without first meeting the EU’s conditions. 

“We have to be extremely vigilant,” the official said, “in assessing the milestones.” 

For legal experts, however, the agreement is a deep disappointment based on Poland’s misleading legislation. 

Wojciech Sadurski, a professor and expert on Polish constitutional law, called the development “very concerning, very upsetting.” The EU, he lamented, has “very big leverage that the Commission has maybe simply surrendered.”

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