(Bloomberg) -- The European Union is working on a proposal to censure Slovakia over the erosion of democratic norms in a move that could result in the bloc withholding funds earmarked for Bratislava.
The European Commission, the bloc’s executive arm, has prepared a decision to trigger the procedure over the increasingly populist Prime Minister Robert Fico’s decision to abolish the special prosecutor’s office that oversaw some corruption cases involving EU funds, according to people familiar with the matter.
The process is in an initial phase and would require the approval of Commission President Ursula von der Leyen.
Commission Spokesman Balazs Ujvari said in an emailed statement that the executive arm is analyzing the reform to Slovakia’s criminal code and that “there is currently no decision taken or awaiting political approval” with regards to freezing funds. A spokesperson from Slovakia’s foreign ministry said in an emailed statement that the commission hasn’t “formally or informally signaled” that it would take such action.
About 80% of all public investments in Slovakia are financed by EU funds. Any potential issues with funding would represent a serious blow to this EU and eurozone member state, which is already facing challenges with excessive deficit in public finances.
One of the proposals would see the commission use its so-called conditionality mechanism — which allows the EU to freeze funding when it sees its money at risk — to withhold some of the €12.8 billion ($14.2 billion) in cohesion funds allocated to Slovakia in the bloc’s budget, said the people, who spoke on the condition of anonymity.
The commission is also exploring the option of clawing back all or part of the €2.7 billion in Covid grants Slovakia has received as part of the EU’s pandemic rescue spending, one of the people said. The special prosecutor’s office was a condition included in doling out those funds.
“The commission is currently in the process of analysing the potential implications of amendments to the Slovak criminal code” related to the conditions set out for the country to receive recovery fund grants, according to the commission spokesman, Ujvari. “The commission will finalize its assessment in a timely manner.”
Since Fico returned to power in October, he has drawn scrutiny from Brussels given his move to overhaul the criminal code and ditch a special prosecutor’s office that focused on high-profile graft cases, including some that targeted his allies.
Fico was shot in an assassination attempt in May. Once he recovered, he blamed a hostile atmosphere fueled by the press and the opposition for the attack. He then overhauled the public media, putting broadcasters under government control.
Slovakia would become the second country subject to the EU’s conditionality mechanism after the bloc froze €6.3 billion of Hungary’s cohesion funds over Budapest’s breaches to the rule of law.
(Updates with comments from the commission and Slovakia in the fourth and eighth paragraphs.)
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