Both nations had threatened to veto the EU’s £1.6trillion budget over an attempt to link the disbursement of funds from its coronavirus rescue package with an insistence that they dump controversial legal reforms which Brussels claims compromise judicial independence. A declaration unveiled at yesterday’s EU summit states that the rule-of-law link to funds will be applied objectively, and only to safeguard the proper use of EU money, rather than to punish countries under separate EU rule-of-law probes.
The compromise, which Mrs Merkel was instrumental in hammering out, removes the immediate veto risk.
However, but billionaire financier George Soros, who has given millions to liberal causes through Europe via his Open Societies foundation, has warned the long-term impact could be highly damaging.
In an article published on the Project Syndicate website, Mr Soros suggested Mrs Merkel had become “something of the sole main decision-maker for the EU”.
He said: “I recognise and understand the enormous pressure under which German Chancellor Angela Merkel has been labouring.”
Referring to Hungary’s Prime Minister Viktor Orban, he added: “I also understand why the German chancellor does not want another country, Hungary, to announce its intention to leave the EU on her watch.
“That is reportedly what Orban was preparing to do in recent days.
JUST IN: Ann Widdecombe warns Boris ‘there will be rebellion’ if he sells out
“Threatening to torpedo the EU’s finances by vetoing its budget was a desperate gamble on Orban’s part.
“But it was a bluff that should have been called. Unfortunately, Merkel has, it appears, caved into Hungarian and Polish extortion.”
With specific reference to the solution floated yesterday, Mr Soros highlighted what he said were “three fundamental flaws”.
Firstly, the declaration altered in substance and intent the text of the regulation that was agreed by EU institutions on November 5, weakening the rule-of-law conditionality considerably, Mr Soros said.
He explained: “Neither the European Commission nor the European Parliament, let alone the national governments that made the integrity of the regulation their main concern in the European Council, should allow themselves to be elbowed aside in this way.”
Secondly, some provisions in the deal allowed for the delay of implementation of rule-of-law conditionality by up to two years, he pointed out.
Mr Soros stressed: “That would be a true coup for Orban, as it would delay any possible action until after the next scheduled Hungarian parliamentary elections in 2022.”
Finally, the declaration was an example of the European Council “acting beyond its authority” in constraining the European Commission’s ability to interpret and act on agreed EU legislation.
Mr Soros warned: “That is a dangerous precedent because it reduces the Commission’s legal independence and may very well contravene the Treaty on European Union, at least in spirit.”
He concluded: “The deal, as it is understood to exist, is ugly and flouts the express wishes of the European Parliament.
“But because of the urgent need to use the €750 billion COVID-19 recovery fund, the European Parliament may very well approve it.
“All I can do is to express the moral outrage that people who believed in the EU as the protector of European and universal values must feel.
“I also want to warn that this compromise may severely dent the hard-won confidence that the Union’s institutions have gained through the creation of the recovery fund.”