Poland challenges EU values, but don’t expect sanctions

Poland challenges EU values, but don’t expect sanctions

The European Union is initiating action against Warsaw’s recent breach of the rule of law. Brussels is unlikely to sanction the Polish government, but this clash reflects growing disparities between European states, with the nationalist push threatening the continental bloc and a growing illiberal current questioning its very fundamentals.

The first stage of opposition between Warsaw and the European Union has been set. Since the election last October of a Law and Justice (PiS) government after eight years of pro-EU and liberal policies under the Civic Platform leadership, Poland has been moving down a nationalistic path.

The government has introduced a series of measures aimed at enhancing its power: first reducing the court’s ability to block laws passed by parliament that might breach the country’s constitution and by appointing like-minded judges, and then seeking to control public media by sacking their management and giving parliament the power to choose their successors.

In Brussels, this was seen as an undemocratic move, deeply opposed to the bloc’s core values and principles of liberal democracy, rule of law, and freedom of speech. The European Commission thus decided to open a preliminary assessment to determine whether they amount to a breach of the rule of law. Practically, the Commission will seek to “clarify the facts and start a dialogue with Polish authorities”, according to Frans Timmermans — the Commission’s first vice-president.

Expect no further steps to sanction Warsaw

There are several potential scenarios going forward.

First, the European Commission could — after review and if recommendations are not followed by Warsaw — decide to move on to the sanction stage. This would importantly include stripping Poland of its voting rights at the European Council, and thus disable Warsaw to decide on EU legislation until the new rules are abandoned. A next step could target EU agricultural funds, of which Warsaw is a large recipient.

However, such a step seems highly unlikely. The EU failed to do just this against Viktor Orban when he started muzzling the press after winning the presidency in Hungary in 2010. As a result, Orban would now veto similar sanctions on Poland, and thus bloc the proceedings since they require consensus.

Source: © Ingram Pinn

The move is also politically dangerous. Fighting nationalistic and Eurosceptic parties or governments has not exactly been a successful approach for Brussels. Take for instance the case of France, where the National Front used the European Parliament’s investigation on its alleged fraud on EU funds to stress once more its opposition to the continental bloc. Since this affair in early 2015, the National Front has kept rising in the polls and succeeded in becoming the first party in two local elections’ first round.

Polish officials are already using nationalist rhetoric as a response to Brussels’ action. As has been the case in the Greek drama last year, references to Nazi Germany to highlight the EU’s (under German leadership) intervention into sovereign affairs have re-emerged, and PiS’ leader Mr Kaczynski has sharpened his anti-German discourse.

Even on the European side, it seems that leaders have little appetite for a head-to-head fight with Warsaw. With a looming Brexit risk and the refugee crisis already exacerbating tensions between European capitals, a frontal collision with Warsaw is the last thing Europeans want.

Hence, the second scenario is the most probable. Brussels will determine that Poland has been excessive and recommend PM Beata Szydlo to take her reforms back. But no sanctioning process will legally be put in place in the short term, and PiS will keep implementing its nationalistic and illiberal agenda.

Expect more collision

The situation will remain frozen until the second stage of opposition emerges. The clash could come from the government’s pledge to cut the retirement age and to raise child benefits despite a public deficit still exceeding the Commission’s target of national deficits below 3% in 2014, and forecasted at 2,8% in 2015.

The government also plans to introduce a new tax on banks and supermarkets, to lower taxes for small firms and to introduce a minimum wage set at 12 zlotys per hour.

Pressure will also build up on the national economy. The government’s plans have started to worry investors, and Warsaw’s main stock index has fallen 16 per cent since October. On 15 January, Standard & Poor’s cut Poland’s long term foreign currency credit rating from A minus to triple BBB plus.

Markets have been anxious since the PiS won presidential elections last May (see chart below). But following S&P’s decision, the zloty fell to a four-year low (4.48/euro), and the yield on Poland’s September 2025 eurobonds rose 12 basis points to 1.6 per cent.

With both political and economic pressure rising, the government will probably intensify its nationalist and illiberal speech, and the opposition to Brussels and Berlin is set to grow by the end of 2016.

A challenge to the EU’s heart

In any case, this affair reflects both existing and emerging trends in European politics.

First, Brussels’ struggle against nationalist parties and governments will intensify in 2016. Whether the sovereignists claim allegiance to the anti-austerity, Eurosceptic, or nationalist movements, they all highlight Brussels’ increasing isolation in European affairs. The refugee crisis is an example of this widening gap.

Secondly, an illiberal movement is gaining traction in Europe, led first by Hungary’s Orban and now joined by Poland. The two hope to repatriate powers from Brussels, and Warsaw is hoping to lead a Central and Eastern European alliance of countries (including the Visegrad Group, Romania, and Lithuania). The result could be a growing challenge for the EU and recognition of its failure to fully integrate the region.

At a time when Europe is cracking down on defining issues like immigration and the need to reform Schengen, an ideological flashpoint would add fuel to the fire. In this context, 2016 will see fierce arguing between European leaders on subjects that also require deep thinking for the future of the EU project.

Categories: Europe, Politics

About Author

Julien Freund

Julien is an analyst with a focus on Europe. He has worked as a lobbyist in Paris and Brussels and has written extensively on the rise of nationalist parties. He holds two master's degrees in geopolitics and international relations and in European relations, and received his BA in economics and social sciences from the Catholic Institute of Paris.