Why are the political stakes so high in Poland’s EU funding row?

By Aleks Szczerbiak

While securing EU coronavirus recovery funds has become a critical litmus test for Poland’s right-wing government, it will be very tricky for it to pass the compromise deal agreed with Brussels that is required to release them.

But if the funds start to flow to Poland in the spring, this will be a huge opportunity for the ruling party to regain the political initiative ahead of the autumn election.

Freezing the post-pandemic funds

The Polish government, led by the right-wing Law and Justice (PiS) party, has been in a long-running dispute with the EU political establishment over so-called “rule-of-law” issues since it came to office in autumn 2015, particularly over its judicial reforms.

The EU institutions agreed with Poland’s legal establishment and most opposition parties that these reforms undermined judicial independence and threatened the key democratic principle of the constitutional separation of powers.

PiS’s supporters, on the other hand, argued that the reforms were justified because, following Poland’s flawed transition to democracy in 1989, the judiciary, like many key institutions, was expropriated by an extremely well-entrenched, and often deeply corrupt, post-communist elite.

It accused the EU institutions of bias and double standards, acting illegitimately beyond their legal competencies, and using the “rule-of-law” issue as a pretext to victimise PiS because the party rejected the union’s liberal-left consensus on moral-cultural issues.

As part of this dispute, the European Commission blocked the release of Poland’s €35 billion share of the union’s coronavirus post-pandemic recovery funds until PiS implemented a July 2021 EU court ruling that it disband a newly created Supreme Court disciplinary chamber for judges.

Warsaw felt that it had satisfied this condition when, last July, the Polish parliament adopted a law proposed by PiS-backed President Andrzej Duda replacing the disputed body with a new, apparently more impartial, professional responsibility chamber.

However, the commission argued that closing down the disciplinary chamber was not in itself sufficient to fully meet its rule-of-law “milestones” for un-freezing the funds.

All of this led to a significant escalation in the conflict between the EU political establishment and PiS government, as Warsaw accused Brussels of moving the goalposts and pledged not to engage in any further negotiations with the commission on this issue.

One of the main points of contention was that the commission insisted that Polish judges should have the right to challenge their colleagues’ status or decisions without being subject to disciplinary action.

The key issue at stake here was whether they could be disciplined for questioning the legitimacy of judges appointed by the newly constituted national judicial council (KRS), an important body that oversees the appointment and supervision of the judiciary in Poland, whom the government’s opponents referred to disparagingly as “neo-judges”.

The council was overhauled by PiS so that elected politicians rather than the legal profession had the decisive influence in choosing its members, and the government’s critics argued that this meant it was under too much political influence.

PiS, on the other hand, argued that making judges and their supervisory organs more accountable to elected bodies was both justified, because the Polish judicial elite had operated as a “state within a state” incapable of reforming itself, and in line with practices in other established Western democracies.

Further concessions secure a compromise

However, in a further shift, in September PiS indicated a willingness to be more flexible with Brussels. The party’s leadership became increasingly nervous that, if Poland failed to secure the billions from the recovery funds, then the country’s economic situation and credibility with the financial markets would worsen, public investment plans dry up and higher interest rates for government debt make state borrowing even more costly.

It was also concerned that the dispute was creating uncertainty about the fate of the much larger €76.5 billion of cohesion funding that Poland is expecting from the 2021-2027 EU budget, the loss of which could be politically catastrophic for PiS.

Moreover, in spite of the ruling party’s attempts to portray its domestic political opponents as working in collusion with Brussels on this issue, most Poles appeared to blame the governing camp rather than the commission or opposition for the potential loss of EU funds.

PiS was particularly concerned that the freezing of the coronavirus funds would become one of the opposition’s main attack lines in the upcoming parliamentary election scheduled for autumn 2023.

As a consequence, last month the government announced that a compromise had been agreed with the commission, which would unblock the recovery funds if the Polish parliament approved a new Supreme Court law further amending the judicial reforms.

A key provision of the proposed legislation was transferring the disciplinary procedure for judges from the professional responsibility chamber, which the commission still considered too politicised, to Poland’s Supreme Administrative Court (NSA), a separate entity from the Supreme Court.

Although a quarter of its members are also so-called “neo-judges”, the NSA is viewed as more independent because its staffing and functioning had not yet been questioned by any EU bodies. Although opposition parties and some Polish legal experts argued that such a move was unconstitutional, the government was adamant about its legality.

Moreover, in a much more significant retreat for PiS, the legislation also extended the scope of the so-called “test of independence and impartiality” of judges.

This was a new procedure established by Duda’s Supreme Court amendment law giving affected parties the ability to request that a court examine objections to a particular judge in their case, but which did not guarantee other judges the right to challenge the status of their colleagues.

The new legislation would allow for the test to be initiated by the court itself and not just by the affected parties, as well as ending disciplinary procedures against judges for formally questioning their colleagues’ status.

Indeed, at one point the recovery fund monies appeared to be within the government’s grasp, as it quickly tabled a draft Supreme Court law which it hoped would receive parliamentary approval before the Christmas break.

For sure, PiS knew that it would have difficulty in securing support from its junior governing partner, the right-wing conservative United Poland (Solidarna Polska) party led by justice minister and vocal Eurosceptic hardliner Zbigniew Ziobro, who has introduced many of the government’s most controversial reforms.

Ziobro and his allies – who have enough MPs to deprive the ruling party of its wafer-thin majority in the Sejm, the more powerful lower chamber of the Polish parliament – said explicitly that they would oppose further concessions to Brussels which, they argued, would lead to anarchy within the Polish legal system by allowing any judge to challenge their colleagues’ status with impunity.

However, PiS hoped to get around this by securing enough support from opposition parties to pass the draft legislation. It expected the opposition to use its majority in the Senate, Poland’s second chamber, to pass amendments hostile to the government’s judicial reforms, but was banking on Ziobro’s party voting these down when the law returned to the Sejm, and then the government’s original bill being passed unamended thanks, once again, to opposition support.

Duda torpedoes the deal

In fact, the draft Supreme Court amendment law survived barely 48 hours before it was unexpectedly torpedoed by Duda and suddenly withdrawn from the parliamentary agenda.

In spite of the government’s earlier assurances, the president complained that he had not been consulted about the contents of the draft. Duda was particularly concerned about the proposed changes to the system for testing judicial independence and impartiality which, by potentially questioning the legality of the president’s appointments, challenged his constitutional prerogative to nominate judges.

Duda feels a strong sense of responsibility towards the judges that he nominated and indicated that he was prepared to block any legislation that undermined their status; a three-fifths parliamentary majority is required to overturn his veto.

Indeed, even the opposition knows that, if it wins the next election, it will have a major headache about what to do with the thousands of “neo-judges” and what the legal status of their countless court rulings will be.

So Duda is now the key domestic political actor that PiS has to square off in order to move forward with this issue. The ruling party is trying to reassure him by, for example, arguing that there are other constitutional protections that prevent the impartiality test from being abused, and that it requires a majority of the trial bench, not just an individual judge, for the process to be initiated.

Although Duda has encouraged parliament to begin work on the draft, given that extending the impartiality test is one of the commission’s core demands, the government’s room for manoeuvre to make concessions to him on this issue is extremely limited.

Such amendments could easily be used by the opposition as a pretext to vote down the law, or elements within the commission hostile to compromise with PiS to scupper the deal.

However, if PiS can reach an agreement with Duda that does not unravel its deal with the commission (and assuming Ziobro’s party remains opposed), then it is the opposition that will play the decisive role in determining the draft law’s parliamentary fate.

Clearly, PiS’s opponents have no interest in making life easier for the government on this issue. Indeed, their strategy for the upcoming election was predicated on the notion that Warsaw would fail to reach an agreement with the commission, with a key element of its electoral appeal being the claim that only a change of government would unblock the coronavirus funds.

Ideally, the opposition would like to stymie PiS’s plans but in a way that they cannot be held directly responsible for Poland failing to secure the EU monies. In practice, however, it will be extremely difficult for them to be seen voting down a compromise deal that the commission has itself approved, and thereby blocking Poland’s access to EU funds and providing PiS with a formidable attack line ahead of the election.

A litmus test of government effectiveness

The fact that PiS has been prepared to retreat on this issue shows how important it is for the party to neutralise the “rule-of-law” conflict with the EU political establishment and secure these funds.

Facing ongoing economic turbulence, a protracted war on its border and resulting energy crisis, and with a critical parliamentary election due in the autumn, the ruling party knows that whether or not the government is able to secure these funds will be a critical litmus test of its broader effectiveness.

But it will be very tricky for PiS to break the impasse over the Supreme Court law, and the window of opportunity to enact the deal is only likely to last for a few more weeks.

However, if the government’s deal with Brussels is approved and the first tranche of recovery fund monies starts to flow to Poland in the spring, this would be a major political success for the ruling party.

It would vindicate its “twin-track” strategy of attempting to decouple disagreements with the EU political establishment over issues such as “rule-of-law” compliance from attempts to develop closer economic ties and normal pragmatic working relations between Warsaw and the union’s institutions on bread-and-butter policy issues such as the disbursement and management of EU funds.

If these funds can help to calm Poland’s economic turbulence and increase the government’s room for manoeuvre on public spending – while, at the same time, United Poland remains within the governing camp, so it retains its parliamentary majority – this will provide PiS with a huge opportunity to regain the political initiative ahead of the autumn election.

Aleks Szczerbiak is Professor of Politics at the University of Sussex. The original version of this article appeared here.