The European Union called on national governments to discipline Poland for failing to uphold the bloc's democratic values, recommending an unprecedented process that could lead to economic sanctions and stripping the country of its voting rights.
The European Commission said Wednesday the government in Warsaw posed a threat to the rule of law and recommended member states trigger Article 7 of the EU treaty. The process is unlikely to lead to Poland being shut out of decision making. But the decision — backed by German Chancellor Angela Merkel and French President Emmanuel Macron — underscores the erosion of trust between the EU's largest states and some of its eastern members.
After years of juggling crises including Greece's debt saga and the worst migration emergency since World War II, EU leaders are turning their attention to the rise of populist forces that reject the bloc's values. The decision is a shot across the bow for governments such as Hungary's, where Prime Minister Viktor Orban has called for rolling back the liberal framework underpinning the world's largest trading club.
"Within a period of two years, a significant number of laws have been adopted, which put at serious risk independence of the judiciary and the separation of powers in Poland," said Frans Timmermans, principal vice president of the commission. "The commission can now only conclude that there is a clear risk of a serious breach of the rule of law by Poland."
"This is the beginning of a long procedure, whose impact on foreign direct investment flows to Poland, investment climate, EU funds allocation within the next budget period, zloty and bonds is highly uncertain," Jakub Borowski, chief economist at Credit Agricole, said on Twitter.
The disciplinary action, while damaging to Poland's reputation, was expected by investors after Prime Minister Mateusz Morawiecki said his country was not going to budge.
The EU left the door open for Poland to resolve the conflict, giving it three months to address recommendations on amending the judicial system reforms. The focus is on laws approved by the Senate that will force two-fifths of Supreme Court justices to retire and give politicians sway over court appointments. They await the signature of President Andrzej Duda, who vetoed a similar package in July amid nationwide protests. Duda is set to make a televised statement at 5:30 p.m.
"Poland values rule of law highly, just like the EU," Morawiecki said on Twitter. "Judiciary reform in Poland is necessary. We need openness and fairness in dialog between Warsaw and the Commission."
While actually imposing sanctions needs unanimous support from the leaders of the EU's other 27 countries, that's unlikely, because Hungary has vowed to shield Poland. Hungarian Deputy Prime Minister Zsolt Semjen said it's unacceptable for Brussels to punish democratically elected governments.
"Both the Hungarian-Polish friendship and the Hungarian government's commitment to treaties bind us to oppose the commission's move," said Semjen, according to the state-run MTI news service.
The Article 7 process may play an important role when EU members begin negotiating aid allotments in the 2021-27 budget cycle. Poland is the biggest recipient of EU aid which, at roughly 10 billion euros ($11.8 billion) a year, has driven growth in the country of 38 million since it joined the EU in 2004.