BREAKING: E.U. Faces Dangerous Dilemma Over Financing Battle

Photo: Reuters

BRUSSELS (Reuters) - Poland's and Hungary's veto of the European Union's (E.U.) 1.8 trillion euro financing package has plunged the bloc into a battle that threatens to damage both its economy and unity at a time when it is already struggling to cope with the COVID-19 pandemic.

The 27-nation bloc faces a dilemma over how to resolve the stand-off and has just a few days to avert a serious crisis.

Warsaw and Budapest hold hostage the 1.1 trillion euro ($1.3 trillion) long-term budget and a special 750 billion euro coronavirus recovery fund for all 27 countries because they do not want access to the money to be conditional on them respecting the rule of law.

Both countries are under E.U. probes for undermining the independence of courts, media, and non-governmental organisations, so they risk losing tens of billions in funds.

The rule linking access to E.U. money with respect for the rule of law does not require unanimity, so Poland and Hungary can be easily outvoted. But the budget and recovery fund do need unanimity and the two countries are exercising their veto power.

To help them withdraw their veto, E.U. leaders are considering issuing a declaration at a Dec 10-11 summit to make clear that freezing funds for rule of law offenders would be an objective process and subject to verification by the E.U.'s top court.

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