Robust rule of law a must before getting EU money, top official says

WARSAW (Reuters) - European Union countries should only get money from the bloc's budget and the COVID-19 recovery fund if they have robust courts and safeguards against corruption, a top official said on Monday, a couched warning to Poland and Hungary, among others.

The 27 national EU leaders meet next week in Brussels to haggle over nearly 2 trillion euros in their joint budget for 2021-27 and extra funds to help kick-start growth on the continent, which is headed for its worst-ever economic downturn.

Conditions attached to getting the money - whether related to democratic standards or economic reforms - are among the biggest points of contention that have so far barred the necessary unanimous agreement among all member states.

"The rule of law should be the condition for distribution of EU money," Vera Jourova, a deputy head of the bloc's executive European Commission said in talks among national justice ministers.

She cited a "functioning judiciary" and powerful mechanisms to fight corruption among the necessary requirements.

That comes as a warning to Poland and Hungary, which have fallen out with the EU over the level of government control over their courts and judges, as well as Romania and Bulgaria, which remain dogged by graft and poverty years after joining the bloc.

"Stopping the money is something I would not like to see, but we need to have in our legal order some guarantee that, if things go really wrong in a member state, then the taxpayers' money cannot be paid," Jourova said of EU funds, which are mostly derived from contributions from national budgets that are replenished by taxes.

Under the latest proposal, the Brussels-based Commission would recommend how to remedy any rule of law problems in any given country. It would require a majority of EU countries to block such a plan.

Deep divisions persist on the matter, however, as countries including Germany, France, Sweden and the Netherlands demand tough safeguards where Poland and Hungary stand accused of violating core values like the freedom of courts and media.

Jourova said the pandemic has proven a democratic "stress test" for Europe. Her colleague, EU's Justice Commissioner Didier Reynders, stressed Brussels would continue keeping an eye on Hungary, where Prime Minister Viktor Orban renounced some special powers granted amidst the coronavirus crisis.

"We must protect the rule of law and rights of liberty with parliamentary control, an independent judiciary and free media. Freedoms should not be restricted even a day longer than absolutely necessary," said Justice Minister Christine Lambrecht of Germany, which currently holds the EU's rotating presidency.

(Reporting by Gabriela Baczynska; Editing by Nick Macfie and Alex Richardson)