Governments fall as the EU battles corruption

Governments fall as the EU battles corruption

By Matt Dallisson, 14/10/2021

A bigger showdown is looming. Poland’s government, led by the populist Law and Justice (PiS) party, has spent years trying to establish political control over its courts, bringing it into conflict with the EU. On October 7th its constitutional court raised the stakes by declaring that parts of the EU’s founding treaty infringe the Polish constitution, and that the final say in such conflicts belongs to Polish judges, not to the EU’s highest court. Such a break with EU treaties could force the European commission to deny Poland access to €36bn ($42bn) in covid-recovery funds. That would be the biggest escalation yet in the EU’s internal feud over the minimum democratic standards that all its members should uphold. If the commission goes ahead, it would signal a strong resolve to bring wayward members into line—and thus mark a big escalation in the long conflict.

Mr Kurz is a 35-year-old wunderkind whose tough anti-immigration policies aided his rapid rise to become head of the Austrian People’s Party (ÖVP), foreign minister and then chancellor. But the scandal has shed unwelcome light on concerns about how he did it. On October 6th police raided the chancellery, the foreign ministry and the ÖVP’s headquarters. The justice ministry’s economic crimes unit accused the party of using money from the Foreign Ministry to bribe a tabloid newspaper to run positive stories on Mr Kurz between 2016 and 2018. The stories were based on surveys allegedly doctored to make him look more popular, produced by a friendly polling agency.

Illiberal regimes often use state advertising to buy influence in the media. Some, such as Hungary’s government under Viktor Orban, do it blatantly. In Austria, things are less clear-cut, but have moved in a worrying direction of late. Government advertising purchases make up a large part of most newspapers’ budgets, and many have long worried that this may exert a subtle influence over their news coverage. But messages on a phone confiscated from a colleague of Mr Kurz showed an unusually naked quid pro quo.

Mr Kurz denies that he broke any laws or had any knowledge of the scheme. He will stay on as head of the party in parliament, and his replacement as chancellor is a close ally, Alexander Schallenberg. He might even have tried to stick it out, had not his coalition partners, the Green Party, threatened to bring the government down if he stayed. Austrians are sharply polarised in their views of Mr Kurz, but he is likely to attempt a comeback. His travails suggest that Europe’s problems with systemic corruption are not limited to formerly communist countries.

In the Czech Republic, Mr Babis’s defeat is piquant in that he long campaigned on an anti-corruption platform, claiming to be too rich to need bribes. He built his fortune starting in the 1990s by creating Agrofert, an agricultural conglomerate. Since entering politics in 2013 he has been dogged by investigations into whether the company abused EU subsidies. That investigation is now being pursued by the European public prosecutor’s office. Mr Babis has put his shares in Agrofert into a trust, but another EU investigative body, OLAF, concluded early this year that his connections to the company constituted a conflict of interest.

In the run-up to the election polls showed Mr Babis’s ANO (“Yes”) party narrowly in the lead. But on October 3rd an international journalists’ consortium released the Pandora Papers, a massive analysis of leaked documents from financial companies. The consortium’s Czech members,, said the leaks showed that in 2009 Mr Babis had sent $22m through a shell company in the British Virgin Islands to buy a secret villa in the south of France.

Mr Babis spent the last weeks of the campaign imitating Mr Orban’s EU-bashing rhetoric. He has imitated Mr Orban’s techniques of media control too: Agrofert owns publications with a 25% share of the print news market. But the Pandora Papers got heavy coverage and may have tipped the balance in the election. Turnout was high, especially among young people and in cities where the opposition is strong. Spolu (“Together”), an alliance of centre-right parties, got 27.8% of the vote to ANO’s 27.1%. An alliance of the Pirate Party with a group of mayors and other officials got 15.6%. Together they will have a narrow majority in parliament because most parties fell short of the 5% threshold.

Mr Babis is far from done. President Milos Zeman, a eurosceptic populist, has vowed to reappoint him as prime minister regardless, claiming ANO won more votes than other individual parties. But that effort is unlikely to last long. Matters are further complicated by the fact that Mr Zeman was taken to hospital on October 10th. The victory of the opposition alliances vindicates a tactic adopted in other countries struggling with illiberal populist leaders. In Hungary too, opposition parties have teamed up across the political spectrum to try to unseat Mr Orban in the election next year.

Balancing out the progress, the Polish court decision on October 8th was the week’s gravest challenge to the rule of law in Europe. Ever since PiS came into office in Poland in 2015 it has been trying to gain control over the country’s courts by giving the government power to appoint pliant judges and punish defiant ones (another model borrowed from Mr Orban). That has brought Poland into ever deeper conflict with EU treaties, which require member states to have independent judiciaries. Polish judges have been barred from referring controversial cases to the European Court of Justice (ECJ), the EU’s highest court. Some who did have been suspended and prosecuted.

The European Commission, which is supposed to enforce the bloc’s treaties, has been a reluctant cop, taking years to inch towards meaningful sanctions. But the constitutional court’s ruling could now force the commission’s hand. In a suit brought by Mateusz Morawiecki, Poland’s prime minister, the court declared that parts of the EU’s founding treaty violate the Polish constitution, and that Polish judges rather than the ECJ have the last word in such questions.

The constitutional court is a rubber stamp for PiS, and officials in Brussels were prepared for an unfavourable decision. But the direct attack on an EU treaty went beyond their expectations. The principle that European law supersedes national law and that the ECJ is the arbiter of disputes lies at the very core of the EU. If member countries can ignore European laws or interpret them as they see fit, the European project is moot. (An earlier blow had been struck in May last year by Germany’s constitutional court, which ruled that in an area concerning European Central Bank financing, the EU exceeded its authority. That row is still being sorted out.)

The commission’s initial statement on the ruling was circumspect, but many officials think the time has finally come for a firm response. It could refuse to authorise Poland’s request for money from the EU’s massive €800bn covid recovery fund, which includes a clause requiring the commission to certify that recipient countries respect the rule of law. Poland has asked for €36bn. It needs the money for a slate of social programmes the government has labeled the “Polish New Deal”. This would be a nuclear step, but it may be a fight over the rule of law that the EU cannot avoid.

This content was originally published here.