On the implementation of the rule of law conditionality regime

MOTION FOR A EUROPEAN PARLIAMENT RESOLUTION

on the implementation of the rule of law conditionality regime

(2025/2061(INI))

The European Parliament,

– having regard to the Treaty on European Union (TEU), and in particular Articles 2, 4(3) and 7(1) thereof,

– having regard to the Treaty on the Functioning of the European Union (TFEU),

– having regard to the Charter of Fundamental Rights of the European Union (‘the Charter’),

– having regard to the European Convention on Human Rights and the protocols thereto,

– having regard to Regulation (EU, Euratom) 2020/2092 of the European Parliament and of the Council of 16 December 2020 on a general regime of conditionality for the protection of the Union budget (Conditionality Regulation) and to the Commission communication of 18 March 2022 on the guidelines on its application (2022 Guidelines),

– having regard to Regulation (EU) 2021/241 of the European Parliament and of the Council of 12 February 2021 establishing the Recovery and Resilience Facility (RRF Regulation),

– having regard to Regulation (EU) 2021/1060 of the European Parliament and of the Council of 24 June 2021 laying down common provisions on the European Regional Development Fund, the European Social Fund Plus, the Cohesion Fund, the Just Transition Fund and the European Maritime, Fisheries and Aquaculture Fund and financial rules for those and for the Asylum, Migration and Integration Fund, the Internal Security Fund and the Instrument for Financial Support for Border Management and Visa Policy (Common Provisions Regulation),

– having regard to Regulation (EU, Euratom) 2024/2509 of the European Parliament and of the Council of 23 September 2024 on the financial rules applicable to the general budget of the Union (Financial Regulation),

– having regard to Council Implementing Decision (EU) 2022/2506 of 15 December 2022 on measures for the protection of the Union budget against breaches of the principles of the rule of law in Hungary,

– having regard to the Commission communication of 12 January 2024 on the application of Regulation (EU, Euratom) 2020/2092 of the European Parliament and of the Council of 16 December 2020 on a general regime of conditionality for the protection of the Union budget (COM(2024)0017),

– having regard to its resolution of 18 June 2025 on the Commission’s 2024 Rule of Law Report,

– having regard to its resolution of 7 May 2025 on a revamped long-term budget for the Union in a changing world,

– having regard to its resolution of 17 January 2024 on the planned dissolution of key anti-corruption structures in Slovakia and its implications for the rule of law,

– having regard to its resolution of 24 November 2022 on the assessment of Hungary’s compliance with the rule of law conditions under the Conditionality Regulation and state of play of the Hungarian RRP,

– having regard to its resolution of 8 July 2021 on the creation of guidelines for the application of the general regime of conditionality for the protection of the Union budget,

– having regard to European Court of Auditors (ECA) special report 03/2024 of 22 February 2024 entitled ‘The rule of law in the EU – An improved framework to protect the EU’s financial interests, but risks remain’,

– having regard to the judgments of the Court of Justice of the European Union (CJEU) of 16 February 2022 in Cases C-156/21, Hungary v European Parliament and Council of the European Union and C-157/21, Poland v European Parliament and Council of the European Union,

– having regard to the Commission Decision of 13 December 2023 on the reassessment, on the Commission’s initiative, of the fulfilment of the conditions under Article 4 of Regulation (EU, Euratom) 2020/2092 following Council Implementing Decision (EU) 2022/2506 of 15 December 2022 regarding Hungary (C(2023)8999),

– having regard to the Commission Decision of 16 December 2024 pursuant to Article 7(2) of Regulation (EU, Euratom) 2020/2092 of the European Parliament and of the Council of 16 December 2020 on a general regime of conditionality for the protection of the Union budget, concerning a written notification from Hungary with regard to Article 2(2) of Council Implementing Decision (EU) 2022/2506 of 15 December 2022 (C(2024)9140),

– having regard to the Commission’s annual rule of law reports,

– having regard to the observations of its Committee on Budgetary Control’s fact-finding missions to Hungary from 15 to 17 May 2023 and to Slovakia from 26 to 28 May 2025,

– having regard to the opinion of the European Committee of the Regions of 2 April 2025 entitled ‘The local and regional perspective in the implementation of the Rule of Law in the European Union’,

– having regard to the opinion of the European Economic and Social Committee of 30 April 2025 entitled ‘The economic dimension of the Rule of Law’,

– having regard to the report by the European Parliamentary Research Service of July 2025 entitled ‘Rule of Law Conditionality Regulation – European Implementation Assessment’,

– having regard to the study requested by its Committee on Budgets entitled ‘The tools for protecting the EU budget from breaches of the rule of law: the Conditionality Regulation in context’,

– having regard to Rule 55 of its Rules of Procedure,

– having regard to the joint deliberations of the Committee on Budgets and the Committee on Budgetary Control under Rule 59 of the Rules of Procedure,

– having regard to the opinion of the Committee on Civil Liberties, Justice and Home Affairs,

– having regard to the report of the Committee on Budgets and the Committee on Budgetary Control (A10-0000/2025),

A. whereas the EU is founded on the values of respect for human dignity, freedom, democracy, equality, the rule of law and respect for human rights, including the rights of persons belonging to minorities, as set out in Article 2 TEU; whereas these values are reflected in the fundamental rights spelled out in the Charter, such as equality between women and men, non-discrimination, and the right of collective bargaining and action, in accordance with EU law and national laws and practices, and embedded in international human rights treaties; whereas adherence to these shared values constitutes the foundation of the rights enjoyed by those living in the EU;

B. whereas the CJEU has established, in various rulings, that all EU funds, programmes and financing are an expression of the principle of solidarity among the Member States and must be based on mutual trust, which presupposes respect for the Article 2 TEU values, for the Charter and for the principle of sincere cooperation affirmed in Article 4(3) TEU; whereas it has furthermore confirmed the clear relationship between respect for the rule of law and the efficient implementation of the EU budget, in accordance with the principles of sound financial management and the protection of the EU’s financial interests;

C. whereas any clear risk of a serious breach of the rule of law by a given Member State can affect the fundamental rights of EU citizens in all of the Member States, trust and solidarity between the Member States, and key EU achievements, such as the functioning of the single market and the independence of the media;

D. whereas the Conditionality Regulation empowers the EU to adopt proportionate financial measures to safeguard its financial interests where breaches of the rule of law in a Member State affect, or seriously risk affecting, the sound financial management of the EU budget; whereas it was adopted as part of the package on the 2021-2027 multiannual financial framework (MFF), following long and difficult negotiations between the co-legislators, notably due to attempts by some of the Member States to link the negotiations on the MFF with the negotiations on the rule of law conditionality mechanism; whereas it has been binding for all Member States since its entry into force on 1 January 2021;

E. whereas the Conditionality Regulation complements other instruments that protect the EU budget against risks deriving from breaches of the rule of law;

F. whereas the Commission has issued guidelines to clarify the application of the Conditionality Regulation; whereas Parliament considered that the text of the Regulation was clear and did not require additional interpretation in order to be applied;

G. whereas the Commission issued a report in January 2024, pursuant to Article 9 of the Conditionality Regulation, to take stock of the application of the legislation; whereas the Commission’s analysis of the only available case confirmed the effectiveness of the protective measures adopted and their potential going forward, but the Commission found that it was too early to draw definitive conclusions, and that more extensive case practice would allow to better identify possible improvements;

H. whereas in December 2024, for the first time, budgetary commitments that had been suspended due to the application of the Conditionality Regulation were ultimately lost by the affected Member State in line with Article 7(3) of the Regulation, because the Member State had not remedied the deficiencies originally identified;

I. whereas the purpose of this report is to scrutinise the implementation of the Conditionality Regulation, according to Parliament’s role as laid down in the Regulation, by pointing to the benefits and shortcomings of its application, and by issuing recommendations for its future implementation;

Introduction of the conditionality regime and legal context

1. Recalls that the rule of law is one of the founding values of the EU and that respect for the rule of law is key to the sound financial management and effective use of EU funding;

2. Highlights that the adoption of the Conditionality Regulation in 2020 represents a core pillar for the protection of the EU budget against risks resulting from rule of law breaches, which applies across the whole budget and allows for a cumulative application of various measures; underlines that the Conditionality Regulation does not have a time limit and therefore applies to current and future financing instruments of the EU budget;

3. Welcomes the affirmation by the CJEU that respect for the values enshrined in Article 2 TEU is an ongoing obligation after EU accession and a pre-condition for enjoying all Treaty rights and benefits deriving from EU membership, including access to EU funds; instructs the Commission to highlight this point in its communication and enforcement activities;

4. Stresses that these financing instruments must not be regarded as substitutes for the Treaty-based mechanisms for safeguarding the values enshrined in Article 2 TEU, and recalls that the suspension of voting rights under Article 7(2) TEU remains an option in cases of persistent and serious breaches of the rule of law;

5. Recalls that the Commission’s ‘rule of law toolbox’ has considerably evolved over the last decade, with the inclusion of multiple instruments to protect the rule of law, including the annual rule of law report covering all 27 Member States, the horizontal enabling condition on the Charter under the Common Provisions Regulation, and the so-called super milestones related to the rule of law under the RRF;

6. Stresses that the conditionality regime is budgetary in nature, as it aims to safeguard the sound financial management of EU funds and the EU’s financial interests, and it only applies where a rule of law breach affects or seriously risks affecting the EU budget; emphasises that it differs from the Article 7 TEU procedure, which penalises serious and persistent violations of the values set out in Article 2 TEU;

7. Underlines that infringement actions under Article 258 TFEU and Article 6 of the Financial Regulation remain complementary tools for systemic breaches of Article 2 TEU values;

8. Commends the CJEU judgments of 16 February 2022 in Cases C-156/21 and C-157/21, which dismissed in their entirety the actions by Hungary and Poland for the annulment of the Conditionality Regulation and unequivocally confirmed the validity, legal basis and compatibility with the Treaty of the Regulation, as well as the EU’s competences concerning the rule of law in the Member States;

Application of the Conditionality Regulation and issues identified

Scope and implementation steps

9. Takes note of the additional clarifications on the process provided by the Commission in the 2022 Guidelines on the Conditionality Regulation, and the review of its practical application in the Commission’s 2024 application report; regrets, however, that the Guidelines were adopted over a year after the entry into force of the Regulation, and that this contributed to a de facto delay in its application;

10. Regrets that, following the entry into force of the Conditionality Regulation on 1 January 2021, the Commission did not immediately trigger Article 6(1) in reaction to ongoing severe violations of the principles of the rule of law in some Member States, which posed a serious risk to the EU’s financial interests; emphasises that in October 2021, following repeated calls on the Commission to act, Parliament launched an action against the Commission before the CJEU pursuant to Article 265 TFEU over its failure to act and apply the Regulation;

Reporting of rule of law breaches under the Conditionality Regulation

11. Notes that potential rule of law breaches are brought to the Commission’s attention through a wide evidence base, including reports by the European Anti-Fraud Office (OLAF), the European Public Prosecutor’s Office (EPPO) and the ECA, as well as submissions from civil society organisations, businesses and whistle-blowers; deeply regrets the lack of transparency as regards Commission assessments that do not lead to the proposal of measures, or that lead to the choice of another instrument;

12. Notes that, to date, only a very limited number of stakeholders have used the Commission’s standard complaint form annexed to the 2022 Guidelines; recommends that the Commission accept complaints in any written form; calls, moreover, for the establishment of a confidential reporting portal through which stakeholders can signal non-compliance, thereby enabling swift remedial action;

13. Regrets that, despite successive worrying findings in the Commission’s annual rule of law reports, and by OLAF and the EPPO, pointing to budgetary risks in several Member States, only two formal notifications have been sent and measures decided in a single case under the Conditionality Regulation;

Assessment and triggering the conditionality mechanism

14. Stresses that the Conditionality Regulation must be applied consistently across all Member States; urges the Commission and, where relevant, the Council, to act expeditiously and in full transparency if a link has been established between rule of law breaches and risks to the EU budget and the Member State concerned does not act to address the situation effectively and sustainably; insists that lengthy informal dialogues must not become a substitute for decisive action, and that political deadlock or blackmailing must be avoided;

15. Emphasises that Commission assessments must be impartial and fair, take account of all available facts, and respect the principles of objectivity, non-discrimination and equality of the Member States before the Treaties; underlines that the choice and scale of budget-protection measures must respect the principle of proportionality laid down in Article 5 of the Conditionality Regulation, taking into account the seriousness, duration and recurrence of the breach, the cooperation of the Member State concerned and the concrete financial risk, as well as the impact on legitimate final recipients and beneficiaries, in particular smaller ones; invites the Commission to disclose the quantitative risk-scoring methodology it already applies internally, as recommended by the ECA;

16. Understands that some aspects of the Conditionality Regulation make it difficult to trigger the mechanism, in particular the requirement to demonstrate a sufficiently direct link between breaches of the rule of law and a serious risk of an adverse effect on the EU budget; stresses, however, that such requirements should not be used as a justification for not triggering the mechanism;

Backsliding and reversal of remedial measures

17. Notes that the Council has decided to suspend 55 % of budgetary commitments for three operational programmes under the cohesion policy for Hungary; points to the legal analysis demonstrating that the systemic and persistent nature of breaches of the rule of law in Hungary should have led to a significantly higher suspension of EU funding, in order to protect the EU budget in line with the proportionality principle; notes that the Commission’s December 2023 and December 2024 reassessments of the situation in Hungary both concluded that the situation that led to the adoption of measures has not been remedied; calls on the Commission to assess and address rule of law backsliding either by proposing additional measures or by updating existing ones;

18. Stresses that EU funds that have been suspended under the Conditionality Regulation must only be released when the situation that had led to the adoption of measures has been remedied in its entirety; calls on the Commission to confirm that rule of law compliance is verifiably achieved in practice, with objective benchmarks and on-site verifications;

19. Recalls that, as early as June 2023, Parliament warned against the risks of reversals of remedial measures once financial sanctions are lifted, a contingency not expressly covered by either the Conditionality Regulation or the 2022 Guidelines; highlights that the ECA has also identified this risk; calls on the Commission to swiftly re-suspend, and, where appropriate, recover, EU funds, if remedial actions are subsequently reversed;

Links between the conditionality regime and other instruments in the rule of law toolbox

20. Recalls that the Conditionality Regulation expressly states that it complements existing budget-protection tools and is to be applied ‘where other procedures set out in Union legislation would not allow the Union budget to be protected more effectively’; regrets the Commission’s interpretation that, on the basis of this wording, the instrument should be used only as a measure of last resort; notes with concern that rule of law monitoring inside the Commission is split between different services, resulting at times in inconsistent and delayed action;

21. Deems it to be unclear how the Conditionality Regulation interacts with other instruments from the rule of law toolbox in practice, in particular the horizontal enabling condition on the Charter under the Common Provisions Regulation and the rule of law-related ‘super milestones’ under the RRF; regrets that in December 2023 the Commission assessed that Hungary had fulfilled the horizontal enabling condition on judicial independence, while maintaining the measures imposed under the Conditionality Regulation; underlines that this lack of coherence hampers the democratic scrutiny of their application;

22. Stresses that the rule of law-related measures required for the release of EU funding, as defined by the relevant decisions taken under the Common Provisions Regulation, the RRF Regulation and the Conditionality Regulation, must be treated as a single, integral package, and that no payments should be made, even if progress is made in one or more areas, if deficiencies still persist in another;

23. Warns that the reallocation or reshuffling of frozen appropriations to other programmes or objectives would signal to non-compliant governments that losses can be offset elsewhere; urges the Commission, therefore, to reject any transfer requests to other programmes or priorities under the same programme that would lead to a circumvention of suspensions under the Conditionality Regulation; requests that the Commission transmit to Parliament the full text of any such transfer request so that democratic scrutiny can precede, not follow, the Commission decision;

Democratic scrutiny and transparency

24. Notes that the Conditionality Regulation empowers the Council – acting by qualified majority – to amend the Commission proposal before the adoption of measures, whereas Parliament’s role is limited to ex post information, thus depriving one arm of the EU’s budgetary authority of a meaningful say in decisions that are key to the protection of the EU budget; notes that in the single case that Council had to decide upon, it chose to modify the Commission’s proposal by lowering the amounts to be suspended, without any justification;

25. Reiterates that Parliament takes its scrutiny role concerning the implementation of the Conditionality Regulation very seriously; acknowledges that the Commission has complied with its legal obligation to inform Parliament immediately of any measures proposed, adopted or lifted; regrets that the Commission only provided the bare minimum information, without key details, and, even upon Parliament’s request, did not share the full documentation; stresses that timely, comprehensive and proactive information-sharing is essential for Parliament to exercise its budgetary and oversight responsibilities effectively;

26. Regrets, in addition, that Parliament has no access to the full text of written notifications and the exchanges between the Commission services and the Member State in question; stresses that withholding such evidence undermines Parliament’s Treaty-based budgetary control prerogatives under Article 14(1) TEU and Article 319 TFEU; deplores, furthermore, that it had to repeatedly resort to letters or resolutions to obtain basic procedural information from the Commission, and that many documents were transmitted with delays;

27. Urges the Commission to agree on a secure communication channel to ensure access to such information for the Parliament bodies responsible, while safeguarding its confidentiality;

28. Regrets that the information made public by the Commission concerning its findings in specific cases under the Conditionality Regulation omits the concrete rule of law breaches detected, the risk analysis methodology and the proportionality calculus; notes that this lack of information has been exploited by extremist actors to spread disinformation about the EU’s motives and procedures;

Protection of final recipients and beneficiaries

29. Recalls the specific provisions in the Conditionality Regulation and the 2022 Guidelines that oblige the EU to safeguard the legitimate interests of final recipients and beneficiaries from the financial consequences of sanctions imposed on their governments; recalls, in particular, the obligation of the Member States subject to measures under the Regulation to continue to honour all commitments towards final recipients and beneficiaries;

30. Regrets that, in practice, the safeguards envisaged remain largely theoretical, since procedures for the direct payment or rerouting of funds are cumbersome, and communication to final recipients and beneficiaries is sporadic; acknowledges that more needs to be done at EU level to improve the protection of the legitimate interests of final recipients and beneficiaries and to ensure their access to EU funding;

31. Observes with concern that in some Member States, kleptocratic oligarchic structures are systematically taking over strategically important sectors, such as banking, retail, food, pharmacy, construction and technology, which may pose risks to the protection of the EU budget, for instance when such structures apply for EU funds; underlines the importance of guaranteeing equal opportunities for all applicants to access both EU funding, and impartial and effective complaints mechanisms;

Lessons learnt and recommendations for future improvements

32. Considers, based on the limited experience, that the conditionality regime has been an effective tool for protecting the EU’s financial interests against risks deriving from breaches of the rule of law; insists, therefore, that the regime continues to be applied to the entire EU budget, including performance-based instruments, so that no line of EU expenditure escapes effective rule of law scrutiny; urges the Commission to ensure that the Conditionality Regulation is consistently applied to the EU budget, irrespective of its financing model;

33. Underlines that, although there is no need to revise the Conditionality Regulation at this stage, some aspects of its application should be improved, with a view to enhancing its effectiveness, transparency, and its coordination and consistency with other instruments in the rule of law toolbox;

34. Calls on the Commission to urgently revise the 2022 Guidelines so as to: address the risk of fund diversion or reallocation more directly; publish a step-by-step methodology showing how proportionality is calculated; define a ‘sufficiently direct link’ between a rule of law breach and a budgetary risk; require clearer links between breaches and measures adopted, including through more precise standards of those breaches; and provide clear solutions and practical steps for when reversals occur;

35. Invites the Commission, in this context, to review its interpretation of the Conditionality Regulation as a last resort instrument and to be more proactive in it use, including the application of Article 6(4), while respecting the principle of proportionality;

36. Requests that the Commission, in its proportionality assessment, systematically consider the consequences for final beneficiaries, specifically smaller ones such as, but not limited to, universities, small and medium-sized enterprises, and civil society organisations, and to reflect that analysis in the dossier transmitted to Parliament under Article 8 of the Conditionality Regulation;

37. Invites the Commission to review how it can effectively fulfil its obligation to safeguard the legitimate financial interests of final recipients and beneficiaries, particularly those who suffer the consequences of rule of law deficiencies, including by enforcing the relevant provisions of the Conditionality Regulation as regards the Member States’ obligations to make payments; stresses that any measures taken to ensure that legitimate final recipients and beneficiaries can continue to access EU funding should not weaken the application of the Conditionality Regulation; expects to be fully involved in this process;

38. Calls on the Commission to make systematic cross-references between infringement proceedings and measures adopted pursuant to Article 6 of the Financial Regulation and pending conditionality screenings, so that the Member States cannot exploit procedural silos and that the EU’s financial interests are protected, regardless of the legal instrument used;

39. Believes that remedial actions should be accompanied by safeguards to prevent, where relevant, the occurrence of similar situations in the future;

40. Expects the Commission to take concrete action to strengthen the links between the recommendations of its annual rule of law reports and financial support from the EU budget, as outlined in the 2024 mission letters to the Commissioners responsible for Budget and for the Rule of Law; invites the Commission to translate the country-specific recommendations from its annual rule of law reports into concrete milestones to be systematically acted upon by the Member States and, where appropriate, to serve as evidence to justify the activation of the Conditionality Regulation;

41. Stresses that the annual rule of law report is currently structured around four pillars, namely: the justice system, the anti-corruption framework, media pluralism, and other institutional issues related to checks and balances; acknowledges that a single market dimension has been included in the 2025 Rule of Law Report to address rule of law issues affecting companies and workers; stresses that a functioning justice system, a strong anti-corruption framework, media pluralism, adequate checks and balances, and a functioning single market are intrinsically linked to the rule of law;

42. Notes that systematic rule of law breaches, identified under the pillars of the annual rule of law report, that have a sufficiently direct link to the protection of the EU budget should lead to the triggering of the conditionality mechanism, notably in cases such as violation, manipulation or favouritism in calls for tender and applications involving EU funding, as well as administrative harassment breaching the equal treatment of local and regional authorities, companies or other final recipients and beneficiaries, and their access to EU funds;

43. Considers that the interinstitutional agreement on budgetary discipline should include a dedicated annex on cooperation concerning the conditionality regime; believes, in this context, that a regular dialogue between the three institutions on the current state of play concerning the protection of the EU budget, with regard to the rule of law, would be an effective way of improving coordination regarding the rule of law toolbox; considers that Parliament should be granted a formal consultative role before the Commission transmits any proposal under Article 6(1) of the Conditionality Regulation;

44. Insists that Parliament’s scrutiny prerogatives be safeguarded by empowering it to monitor consistency in the (non-)application of the conditionality regime, thereby preventing political instrumentalisation or opacity; invites the Commission to transmit to Parliament a consolidated annual inventory of all conditionality-related decisions across budget headings in the context of the annual budgetary procedure;

45. Calls for quarterly structured dialogues between the Commissioners responsible and Parliament’s committees responsible, to guarantee real-time information flows and reinforce democratic oversight;

46. Calls on the Council to keep the process fact-based and objective, and to stick as closely as possible to the Commission’s proposals; urges the Council, furthermore, not to transform the process leading to the adoption of measures into a bargaining chip;

47. Asks the Commission to set up an interactive portal which would enable citizens, final recipients and beneficiaries, and economic operators, to follow the whole life cycle of conditionality cases from notification to eventual lifting of measures, in order to enhance transparency and prevent misinformation; calls, in this regard, on the Commission to publish fact sheets featuring every future action under the Conditionality Regulation, setting out the type and assessment of breaches, the impact on the EU budget, and, where relevant, the proportionality of its proposed measures; invites the Commission to ensure that the relevant information is disseminated to the final recipients and beneficiaries concerned and to the wider public;

48. Considers that, while the Conditionality Regulation is primarily designed to protect the EU budget from breaches of the rule of law, there is merit in exploring ways of strengthening the protection of the EU budget against violations of the other values enshrined in Article 2 TEU; recalls that the EU budget is not neutral to breaches of democracy, equality and fundamental rights, which can have tangible financial implications; invites the Commission to assess the extension of conditionality instruments in cases of serious and systemic violations of other Article 2 TEU values affect the EU budget;

49. Calls on the Commission to reinforce its investigative capacity by establishing a standing roster of specialised experts capable of assessing complex rule of law breaches, thereby ensuring swifter, technically robust decisions, and to develop an IT system that enables the detection of patterns or similarities in reports received;

50. Encourages the Commission to adopt a more proactive approach in dealing with complaints, and to ensure that complaint procedures under the Conditionality Regulation provide adequate protection for whistle-blowers, particularly those in precarious situations, for whom whistle-blowing poses great risks, in order to incentivise reporting;

51. Calls on the Member States to ensure respect for the rule of law and to swiftly address any identified breaches, so as to protect the EU’s financial interests and prevent the adoption of measures under the Conditionality Regulation; calls, furthermore, for the allocation of adequate resources to national authorities, whose work is essential to ensure the upholding of the rule of law;

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52. Instructs its President to forward this resolution to the Council, the Commission, the Court of Auditors, the Court of Justice and to the governments and parliaments of the Member States.

EXPLANATORY STATEMENT

Background

In December 2020, as part of the legislative package on the EU’s Multiannual Financial Framework (MFF) 2021-2027, the Parliament and the Council adopted a Regulation on a general regime of conditionality for the protection of the EU budget against breaches of the principles of the rule of law (the ‘Conditionality Regulation’). The rule of law conditionality mechanism forms part of the EU’s ‘rule of law toolbox’, which should ensure adherence of all Member States to the rule of law, which is one of the fundamental values enshrined in Article 2 TEU. The Conditionality Regulation is to protect the EU’s budget and financial interests in the case of breaches of the rule of law, which affect the financial management of the EU budget or the protection of the EU’s financial interests. Under the Regulation, the Commission is obliged to monitor the situation in all Member States. So far, the mechanism has only been triggered once, in December 2022 against Hungary. Following two reassessments of the situation by the Commission, the measures are still in place, and Hungary has already lost EUR 1 billion, which have been irreversibly decommitted.

Aim and timing of the report

Since the conditionality mechanism has been in place for almost five years, it is an opportune moment for Parliament to assess its application and to draw lessons for the future, in particular in view of the forthcoming discussions on the post-2027 MFF. In this context, the co-rapporteurs wish to put particular emphasis on the transparency of the process, areas of applicability, revision of the guidelines, deterrent effect, and the scrutiny role of the Parliament.