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Mar 23, 2023
Poland’s Access to €75 Billion on the Line in Judiciary Dispute
(Bloomberg) -- Poland stands to lose out on more than €75 billion ($82 billion) in European Union budget funding if it fails to approve legislation giving its judiciary more independence, a process that was thrown into limbo last month.
The European Commission had already made the legislation a condition for more than €35 billion in post-pandemic assistance, a separate pot of financing. But the EU’s executive arm is also tying it to so-called cohesion funds laid out in the bloc’s 2021-2027 budget, according to people familiar with the funding decision, who declined to be named.
That would leave the government in Warsaw missing out on a far larger volume of financing if the reform, which would reverse changes that the EU says politicize Poland’s court system, isn’t pushed through. Poland’s ruling Law & Justice party risks being left empty-handed as it grapples with the nation’s cost-of-living crisis months ahead of an election this year.
Lawmakers last month passed legislation that rolls back key elements of Poland’s controversial judiciary changes, a move to compromise in the rule-of-law dispute to access EU funding. After negotiations with the commission, the legislation would effectively short-circuit a disciplinary regime for judges that had come under special scrutiny by Brussels.
But President Andrzej Duda, whose signature is required to finalize the changes, plunged the process into turmoil by submitting it to court review.
The fallout from a failure to push the changes through may now be more grim. The EU’s executive arm has made access to cohesion funds — a cornerstone of Poland’s rapid economic growth since joining the EU in 2004 — conditional on so-called enabling conditions that adhere to the EU’s Charter of Fundamental Rights.
In October, the commission said Poland’s access to cohesion funding was at stake for failing to comply with the bloc’s democratic standards. Tying the larger pot of funding to the overhaul legislation pushed last month sets out a more concrete condition.
Prime Minister Mateusz Morawiecki last month hailed EU budget aid as his government’s “great success” and described the cohesion funding as key for Poland’s economic growth. Cohesion funds are drawn from the EU budget, aimed at bolstering member states whose economies are 90% of the bloc’s average or less.
Elisa Ferreira, the EU’s cohesion and reform chief, said Tuesday that Poland has fallen short of meeting all the conditions for payments, some of which had to do with “legal aspects” she didn’t name. The funds weren’t lost, but remain on hold until the conditions are fulfilled.
“We’re waiting for the internal evolution in Poland so that Poland considers that this compliance is already guaranteed,” she told reporters. “Until then, unfortunately, we cannot organize and do the normal transfers of funding according to the normal function of the cohesion policy.”
The legislation remains in limbo. The president of Poland’s Constitutional Tribunal, Julia Przylebska, promised to move swiftly with the review. But court’s work may be hobbled by infighting. Some justices questioning her legitimacy have threatened not to rule, which could prevent a quorum and hold up any decision.
The EU, which has accused the Constitutional Tribunal of lacking independence, sued Poland over the court’s decision in 2021 that challenged the primacy of the bloc’s law. The commission said last month it’ll take the issue to the EU’s Court of Justice for failing to address its concerns.
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