The remaining EU member states have been at loggerheads throughout this year over a post-Brexit trade deal with the UK, as well as the huge budget for the next six years and crucial recovery package to help the bloc recover from the coronavirus package. The huge financial package for a continent being devastated by the CPOVID-19 pandemic involves a mix of grants worth £447billion (€500billion) and loans of £224billion (€250billion), financed by the EU issuing debt collectively and then handed to individual member states. But the EU was plunged into crisis on Monday after Hungary and Poland vetoed Brussels’ £985billion (€1.1trillion) budget for 2021-2027 and the huge coronavirus rescue package over a clause that ties funding with adherence to the rule of law in the bloc.
EU ambassadors from the remaining 27 member states had voted through the clause that made access to EU funds conditional on adherence to the rule of law.
However, for the budgets to be fully approved, they needed unanimous support, and were then blocked by both Poland and Hungary.
The EU is currently carrying out an investigation against both opposing countries for undermining the independence of courts, media and non-governmental organisations.
If the clause that ties funding with adherence to the rule of law in the bloc, it could cost both Poland and Hungary billions of euros in EU funding.
Mr Rutte, the longest serving EU leader after German Chancellor Angela Merkel, addressed the issue in the Dutch Parliament on Tuesday, repeating the Rule of Law conditionality compromise is the “bare minimum” for The Netherlands.
But in further warning, he added: “The EU can only survive in the long term if it is also a community of values.”
Hungary’s Prime Minister Viktor Orban, often van outspoken critic of the EU, had written to Ms Merkel, European Commission President Ursula von der Leyen and European Council President Charles Michel confirming he would veto the budget and coronavirus relief package.
He wrote: “There’s no agreement on anything until there’s an agreement on everything.
Zoltan Kovacs, a spokesman for Mr Orban, also said: “We cannot support the plan in its present form to tie rule of law criteria to budget decisions.”
Poland’s Justice Minister Zbigniew Ziobro told a news conference that “there will be no consent to this mechanism” and that such a mechanism would “radically limit Poland’s sovereignty”.
He added: “It’s not about rule of law, which is only a pretext, a beautiful word that goes nicely in the ear, but it is really about institutional, political enslavement, (and) a radical limitation of sovereignty.”
But German ambassador Michael Clauss, who chaired Monday’s meeting, warned the EU could be faced with a “serious crisis” if the huge financial packaged it not adopted soon.
He said: “We have already lost a lot of time in view of the second pandemic wave and the severe economic damage.”
Speaking shortly after the budget was blocked, Austrian Chancellor Sebastian Kurz said “upholding the principles of the rule of law is an absolute necessity” due to the huge sums being handed out by the EU to member states.
The EU Commissioner for Budget and Administration Johannes Hahn said he was “disappointed” by the veto from Poland and Hungary.
He tweeted: “Disappointed that #EU MS could not advance on #MFF & #NGEU agreement.
“I urge MS to assume political #responsibility + take the necessary steps to finalise the entire package.
“This is not about ideologies but about help for our citizens in the worst crisis since WWll!.”
The future of the EU has continued to be brought into question this year, with Brussels under pressure to secure a Brexit deal with the UK because of fears of a £30billion blow to trade.
Last month, a report from Allianz warned Germany, France and the Netherlands have the most to lose if the EU’s chief negotiator Michel Barnier refuses to compromise in the rows over fisheries and common standards.
The German insurance giant said the chances of a no-deal Brexit have “considerably increased to 45 percent”.
The Netherlands would be hit by a massive decrease of £4.3 billion decrease in annual trade with the UK as a result of a no deal Brexit with the European Union.