Democracy
Accounting for Autocracy
Rule of Law in the Next EU Budget
The price of democratic backsliding may soon rise.
In July, the European Commission presented its proposal for the 2028-2034 Multiannual Financial Framework (MFF), the EU’s long-term budget. Tucked into its pages was a monumental shift in the bloc’s ability to combat democratic erosion. The MFF would condition National and Regional Partnership Plans (NRPs)—which cover development, agricultural and migration funds—on compliance with rule of law and the EU’s Charter of Fundamental Rights. Currently, agricultural funds do not face the same level of scrutiny as other funding streams. This is in part because the primary rule-of-law instrument governing them, the Conditionality Mechanism, requires a Council vote to impose punishments on member states and can be invoked only when democratic backsliding directly threatens, through corruption for example, the administration of the EU budget.
The Commission’s reform of the MFF comes as its own 2025 Rule of Law Report found full implementation or significant progress on only 18% of the previous year’s recommendations on judicial independence, anti-corruption frameworks, media freedom, and checks and balances. This signaled that current tools to address key aspects of democratic backsliding are insufficient.
Two other budgetary changes could also transform Brussels’ battle against such backsliding. First, the Commission has proposed “smart conditionality” measures that would allow spending to bypass national governments whose NRPs are frozen and provide limited EU funds directly to would-be recipients such as NGOs or universities. Smart conditionality, therefore, could help keep civil society organizations afloat when they are targeted by a backsliding member state, as is the case in Hungary and Slovakia. Second, the Commission is seeking to build on a blueprint laid out by the current Common Provisions Regulation (CPR), a relatively obscure budgetary rulebook decided alongside the MFF each cycle. The 2021-2027 CPR contains a new provision requiring compliance with the Charter of Fundamental Rights as a precondition for access to all funding governed by the regulation. Crucially, the Commission has the power to unilaterally determine when there are charter violations, freeing it from the political restraints of Council voting necessary to initiate other rule-of-law enforcement mechanisms. The Commission invoked the CPR against Hungary and Poland in December 2022. It is now suggesting in the upcoming MFF that a similar procedure be applicable for all EU funding.
The Commission’s MFF still has many hurdles to clear, including unanimous Council approval. With Hungary at the table, that will be nearly impossible. However, losing access to EU funds, despite its unclear impact on forcing backsliders to reform, has galvanized Hungary’s opposition ahead of 2026 elections. Indeed, the country’s illiberal prime minister, Viktor Orbán, may be ousted before EU budget talks conclude in 2027, partially because of lost EU funds. Hungary aside, other backsliding member states would have an interest in ensuring that the Commission cannot unilaterally act against them. This makes it unlikely that either of the Commission’s proposals will pass. The backsliders themselves will likely block Commission efforts to curtail democratic erosion.
The body’s newfound budgetary ambition is nevertheless a positive sign, and the renewed focus on rule-of-law enforcement is not limited to budget negotiations. Following the Ukrainian government’s curtailment of the independence of its anti-corruption authorities, the Commission froze €1.5 billion in aid to Kyiv. Ukraine promptly restored the agencies’ independence, in part due to that move. The Commission’s demand that rule of law be respected even by a close ally at war reflects resolve in protecting fundamental values, even in candidate countries.
Other bodies are also acting. The Danish presidency of the European Council, which lasts until December, is pushing to suspend Hungary’s voting rights. In the European Parliament, the leaders of the center-right, center-left, Liberals and Greens have voiced support for strong rule-of-law language. These efforts may or may not succeed, but EU institutions are stepping up to try to bolster democracy at home.
Still, allowing the Commission to unilaterally freeze funds is not a panacea. The Commission, like the Council, depends on political alliances and relationships with member states to achieve its goals. Action against Italy, for example, are unlikely given Rome’s importance to the Commission’s priorities on migration and transatlantic relations. And lowering barriers to rule-of-law enforcement would raise more questions about what constitutes a breach of EU values. Even member states typically viewed as stable democracies could be found in violation of democratic principles. A Dutch court recently ruled that Belgium is guilty of “systemic failure” to meet the basic needs of single, male asylum seekers. A Commission with unilateral enforcement power could quickly be forced to determine if such judgments are grounds for suspending funding.
The Commission’s MFF proposes bold rule-of-law changes aimed at disarming backsliding member states that have used Council vetoes to shield themselves from accountability and obstruct EU initiatives such as Ukrainian accession and sanctions on Russia. The momentum behind these democracy-bolstering measures is heartening, but only time will tell if the next MFF will safeguard the rule of law.