Q2 / Average monthly income per capita in Romania has risen to nearly RON 1,600: Changes in redistribution of family budget

Data published by INS for the second quarter of 2018 show that Romanians’ monthly incomes have reached nearly RON 1,600 per person. They were RON… Mai mult

Current account deficit flickers to red on dashboard

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Strategic chemical industry: Romania, on top in import increase and ranking last in EU in terms of increase in exports outside single market

Data published by Eurostat show that Romania recorded the second highest annual growth rate in imports of non-EU chemicals from 2007 to 2017 (13.1% per… Mai mult

Economic growth in the pocket: Current accounts vs. saving accounts – 64% to 4.5%

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Domestic software and IT services market declines, growth will only be based on external market

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European mechanism “Money only for the rule of law”: Commission’s radical initiative to “strengthen correlation between EU funds and rule of law”

de Victor Bratu , 7.5.2018

The draft 2021-2027 multiannual budget of the European Union is accompanied by a radical Commission’s initiative on “Strengthening the correlation between EU funds and the rule of law”.

Translated in common language, the Commission formulated on Wednesday the principles of a mechanism based on which to cut European funding for those member states that do not respect the “rule of law” principle.

The new framework would obviously be applied starting with the next financial year.

Very important: The so-called “Financial Supervisory Mechanism” is a separate proposal from the draft multiannual budget – which requires the unanimous approval of the member states in order to be adopted, so it does NOT need unanimity to be put into operation.

Present at the European Parliament, where the draft budget was discussed before the public presentation, President Jean Claude Juncker assured MEPs that the proposal is “about respecting the rule of law, which is an indispensable condition for the sound financial management,” and does not target any particular state, but will be applied across the Union.

It is clear, however, that once adopted, the mechanism will put pressure first on Hungary and Poland, countries harshly criticized lately for their internal slippages, but also on Romania, which has already come under the spotlight because of the changes in the laws of the judiciary.

Details of the mechanism

The newly proposed mechanism would allow the EU to suspend, reduce or restrict access to European funding in a manner “proportionate to nature, gravity or areas affected by the deficiencies of the rule of law.”

A possible decision in this respect against a member state should be proposed by the Commission and adopted by the Council by the so-called reverse vote of the qualified majority. That is, the proposal is adopted unless a qualified majority is against it.

In the Council, the qualified majority is voted by at least 55% of the member states (16 out of 27), representing at least 65% of the EU population.

This decision can be invoked when, from the rule of law point of view, a generalized deficiency threatens:

  • The proper functioning of the authorities implementing the European Union budget
  • the correct functioning of the investigation and prosecution against budget-related fraud and corruption acts
  • efficient judicial control run by independent courts
  • prevention and punishment of fraud, corruption or other breaches of the EU budget legislation
  • efficient and timely cooperation with the European Anti-Fraud Office and the European Prosecutor’s Office

The new rules would be applied in relation to:

  • all European funds under common administration
  • funds under direct and indirect management, where the financial beneficiary is a government entity (national, regional, local authority, public body or private organization entrusted with a public service mission)
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