A conditionality mechanism in the European Union (EU) budget tied to the rule of law creates important consequences for the EU’s future in several regards. Specifically, one effect that should not be underestimated lies within the field of foreign policy, where the EU depends heavily on its external credibility to exert influence. One much-discussed strand of theorisation on EU foreign policy considers the EU as a ‘normative power’. This understanding of the EU as a foreign policy actor adds a valuable perspective that helps to explain the importance of a strong rule of law conditionality mechanism in the continued negotiations on the EU budget and the pandemic recovery fund.

Background

During the last decade, two Member States, Hungary and Poland, have challenged the common values that are set out in the treaties by dismantaling rule of law domestically. This has put pressure on the European Commission to invoke Article 7 of the Treaty on European Union – a procedure that suspends certain rights (e.g. voting rights) of a Member State, but which requires unanimous agreement from the European Council. Therefore, Hungary and Poland are aware that, as long as they support each other, the threat of Article 7 proceedings as part of the Commission’s arsenal is less of a “nuclear option” and more akin to pretty fireworks.

This impasse has not gone unnoticed by other Member States. During negotiations on the multiannual financial framework (or the “EU budget”) and the corona pandemic recovery package (or “Next Generation EU”), one of the main talking points revolved around whether unanimous agreement could be reached on a conditionality mechanism that ties access to EU funding to respect for the rule of law. In this regard, two main points can be highlighted in the conclusions from the 4-day long special meeting of the European Council.

First, it states that a regime of conditionality will be introduced to protect the rule of law, based on qualified majority voting. This ensures that Poland and Hungary would be unable to create a blocking minority, even with the support from its Visegrad Group allies (i.e. Slovakia and the Czech Republic), as well as other countries (e.g. Romania and Bulgaria), that run a higher-than-average risk of losing EU funds with a conditionality mechanism.

Second, it states that money from the EU budget and the recovery fund shall be used in line with the common values of the treaties, including respect for democracy, the rule of law, and human rights. However, the exact design of the mechanism was kept open since Poland and Hungary refused to accept a mechanism that they perceived as unfairly targeting them. Even so, Member States, the Commission, and the Parliament will need to agree on a conditionality mechanism by the end of 2020. The strength of that mechanism will determine the extent to which the EU will be able exert influence by spreading its values and ideas. In other words, it will determine the credibility that forms the basis of its normative power.

Normative Power

EU security is dependent on the stability of its surroundings. A neighbourhood that embraces democracy, rule of law, and human rights creates highly advantageous economic and political conditions for peaceful and sustainable development. Therefore, the successful diffusion of these values is beneficial for both EU Member States and partner countries, and spreading these principles can be achieved in multiple ways.

The term ‘Normative Power Europe’ was coined to denote a type of power exertion that differs from economic and military power. Specifically, normative power suggests a third alternative way of exerting influence through ideas, opinions and conscience to shape what is perceived as ‘normal’ in international relations. Normative power is further divided into two aspects: being normative (a potential source of normative influence); and acting in a normative way (behaving ethically).

So why should the EU care about its normative power? After all, as the world’s largest trading bloc, it can exercise its power through the externalisation of market-related policies. And, given its deepened cooperation in defence (CSDP in general and PESCO in particular) and military operations (EUFOR and EU NAVFOR missions), could the EU not exert military power to achieve its goals? While both may be true, I would advocate two strong lines of argumentation for why the EU should cultivate and prioritise its normative power: efficiency and ethics.

Norm diffusion can be initiated in several ways, with varying degrees of efficiency. At first glance, economic incentives may be a reasonable instrument to help cover potential implementation costs that follow from accepting a normative change, or to reduce short-term costs that stand in the way of long-term benefits. However, the offering or denial of material incentives emanates from an unequal relationship between the promoter and the receiver of norms. It would be both inefficient and unethical to exploit the hardships of a weaker counterpart by ‘forcing’ it to accept new norms by offering benefits that it cannot afford to decline. This does not provide the norm-receivers with the opportunity to internalise the new values and make them their own; they would still be forced upon them. The key component lies in the active involvement of all relevant parties in the deliberation leading up to the decision to initiate cooperation and ultimately adopt new norms.

Democratic norms can also be imposed upon a country through military means. The norm-receivers seldomly accept such despotic power exertion, which creates a backlash as soon as the norm-promoter is forced to withdraw its military presence, leading to the norms being rejected. This kind of norm diffusion is (of course) also highly unethical, or should at least be reserved for exceptional cases. The cosmopolitan dilemma of universal responsibility versus military force as an exercise of dominance makes humanitarian military intervention, at most, a last resort with high thresholds of proportionality and efficiency as well as the requirement of international institutional authorisation. This means that military exertion should be ruled out as an option in almost all cases.

However, if a norm-receiver internalises the norms after an extensive process of socialisation, dialogue, deliberation, and knowledge-exchange, the change will be much more durable. Since these instruments do not pressure the norm-receiver into adopting new norms, it is hard to imagine a non-ethical way to diffuse norms by these means (assuming they are not based on false premises). This creates a legitimacy for the new norms and gives the local population ownership over the values that it now embraces. These norms will then be defended and will be more persistent when facing future rivalling norm entrepreneurs and influences.

Given this, how can the EU achieve the right conditions for effective and ethical norm diffusion? The academic literature approaches ‘normative power’ in several ways, focusing on different aspects. From this, I propose five key aspects that are critical if the EU wants to be a successful normative power: identity, interests, behaviour, means, and ends.

1. First, the EU needs to have a normative identity based on an awareness of its normative capacity and a willingness to actively project its norms – thus, turning its capacity into influence. It also needs to consider the perceptions of others to ensure that its own self-perception as a normative power does not differ too much from the perceptions of others.
2. Second, the EU should base its foreign policies on normative interests – meaning that they are based on higher-ranking values, rather than being subject to change depending on which course of action promises the highest material rewards.
3. Third, the EU needs to adopt a normative behaviour. This means that it should ‘live by example’, since normative power only can be applied credibly through consistency between internal policies and external prescriptions and actions.^[1]
4. Fourth, as discussed above, a normative power prioritises normative means of power over economic and military power, although material incentives and physical force may still be used after rigorous ethical considerations. To achieve this, the EU needs to rationalise its external actions through processes of engagement and dialogue. This provides the possibility to reason with counterparts that are affected by its external actions.
5. Lastly, the concept of ‘power’ implies the ability to achieve results; therefore, the EU must be effective in achieving a normative impact to be called a ‘normative power’.

Rule of Law Conditionality and the Normative Power of the EU

If the EU were to embrace being a normative power, how would the rule of law conditionality mechanism affect this? To be succinct, it is pretty clear-cut. A strong mechanism would be beneficial in all five aspects of normative power. Meanwhile, a failure to implement an effective mechanism would be detrimental to the EU’s ability to believably promote stable democracies in its neighbourhood.

First, regarding the EU’s normative identity, a weak conditionality mechanism would affect the EU’s self-perception. If the common values are compromised, the European cooperation would become little more than an economic project in the long run. Domestically, it becomes difficult to justify political cooperation with countries that have vastly different political interests and ideals in an intergovernmental arena, e.g. foreign policy-making. It would also be detrimental to the relational aspect of foreign policy; the perceptions that people in third-countries have of the EU would deteriorate, which in turn would hamper the EU’s ability to credibly propose any normative changes within those communities – both among elites and at the grassroots level.

A weak conditionality mechanism would also undermine the EU’s normative behaviour, which is dependent on its ability to live by example. Without consistency between the EU’s internal policies and its external prescriptions and actions, it would be labelled hypocritical. This also makes it vulnerable to both legitimate critique on credibility, as well as populist ‘whataboutism’. Giving third-country officials the opportunity to deflect criticism by referring to undemocratic practices within the EU prevents a fruitful dialogue on how to develop mutually beneficial measures to improve the situation. In this way, it also decreases the effectiveness of the EU’s normative means of influence. If the EU is instead forced to rely on material incentives (or even military intervention), it would lower the chances of achieving a durable impact. This runs the risk of creating a chain-reaction where the EU loses credibility, attraction, and a common sense of purpose in foreign policy.

Going Forward

With this in mind, it is welcome to see the European Parliament’s commitment to the rule of law. In its resolution, which serves as a mandate for the coming negotiations, the European Parliament “strongly regrets” that the rule of law mechanism was significantly weakened. Members of the European Parliament declared that they are prepared to withhold their consent unless the deal is improved within this area, among others.

Among the Member States, France, Sweden, Finland, Denmark, and the Netherlands form a coalition for a strong conditionality mechanism. Most likely, they will find support from most of Western Europe; for example, from Germany and Belgium, who previously proposed a rule of law mechanism last March 2019.

With both a Parliament veto and a strong coalition of Member States promoting a strong rule of law mechanism, there seems to be a real opportunity to defend the common values of the EU. Of course, Hungary and Poland still have their respective vetoes in the Council. However, as net-receivers, they stand more to lose if they cannot achieve Parliament’s approval for the funding. Negotiators are running out of time to get EU money flowing before the end of the year. Viktor Orbán (Prime Minister of Hungary) and Mateusz Morawiecki (Prime Minister of Poland) will still need to be convinced in a way that lets them present the outcomes as a victory to their voters.

One way to appease Poland could be to offer an expansion of the Just Transition Fund, which is aimed at reducing the socio-economic costs for communities most affected in the short-term from the green transition, such as in regions where the production of coal and oil will be phased out. While this fund was cut by two-thirds during the final round of budget negotiations, Poland would stand to gain a lot if some of these funds were reintroduced. In general, a larger Just Transition Fund would be beneficial for all Member States, as all Members stand to gain from a less coal-dependent Poland.

However, bargaining with Hungary will be more difficult as Orbán has been the most outspoken opponent to the rule of law conditionality. Speaker of the Hungarian Parliament Laszlo Kover stated that parliament “will never accept any political conditions for the recovery package”, and that Orbán has reserved the right to veto the deal as a last resort.^[2] However, this stance is both politically and economically costly in the long run. Still, if there is one head of state that would go against a united front consisting of the Commission, the Parliament, Germany, and France, it would be Orbán. Yet, this is not an area where any ground can be conceded; the rest of the EU needs to find a way to settle with Orbán.

For the future of the EU, continued negotiations on the rule of law conditionality in both the EU budget and recovery fund will have to be closely monitored. As the French Minister of European Affairs Clément Beaune recently remarked, “If there is doubt about how strong the EU is on its basic values, then there will be a doubt in the minds of every citizen about the relevance of the project […] Europe is not only a market but a cultural and political project.”^[3] This is a central tenet for the future of European cooperation in general, and EU foreign policy in particular.