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(CNN)Brussels began the week in celebratory mood, as member states of the European Union finally agreed how they would distribute around $2 trillion of funds across the bloc over the next seven years.
The package, agreed in the early hours of Tuesday morning after four days of talks, comprises the $1.3 trillion seven-year EU budget plus a special $858 billion emergency package. It's designed to help the bloc recover from the Covid-19 pandemic as one, rather than abandoning poorer countries to their fate as wealthier nations surged back.
Getting all 27 EU states onside for a controversial package over four days of hard negotiating was undoubtedly a huge success. But as the bubbles from the champagne breakfasts evaporate, it will become impossible to ignore the fact that the union has agreed a compromise today that could create massive headaches later.
In recent years, Europe has been forced to acknowledge that the union faces an existential crisis, as some member states backslide on democratic norms. The two most egregious offenders in the eyes of the EU are Hungary and Poland, who in recent years have restricted press freedoms, cracked down on critics, and eroded judicial independence.
The emergency fund, first proposed by French President Emmanuel Macron and German Chancellor Angela Merkel in May, had always been controversial, as the monies would be raised against mutualized EU debt then distributed as a mixture of loans and grants.
Despite the controversy, it was clear to most member states that some kind of EU-level Covid response was inevitable. This created the opportunity to use these funds as an incentive to pull nations like Poland and Hungary back from the brink.
The EU has historically struggled when it comes to bringing delinquent members to heel. The much-discussed Article 7 of the EU's Lisbon Treaty -- which provides a mechanism for sanctioning member states by revoking their voting rights -- has always been flawed. The process is cumbersome and ultimately requires unanimous action from all other member states to punish an offending one, which was never likely to happen. There have been active discussions in Brussels since 2018 to creating some kind of external mechanism outside of the treaty, to make the process more effective.
Tuesday's agreement refers to such a mechanism. But critics feel it does not go far enough: An earlier version of the agreement published on Monday evening contained stronger language than the final document. Instead of a direct, easy way to withhold funds from countries offending member states, officials in Brussels are left with a fudge, contestable and open to interpretation. The only clear line on rule of law in the final document reads: "The European Council underlines the importance of the protection of the Union's financial interests. The European Council underlines the importance of the respect of the rule of law."
Some felt the final text had been severely watered down. "The original text was much more promising. [But] it seems that the Hungarian government was in a very good negotiating position," says Petra Bard, Visiting Professor at the Central European University. "They wouldn't have minded the whole deal being delayed for another couple of months. That meant other member states had little choice but to agree this vaguer wording that can be interpreted in many different ways."
This result was probably always inevitable. This EU summit has been described as the most bitterly divided in recent memory.
French officials said that Macron "slammed his fist on the table" in anger (although the Elysée later tried to say it was "metaphorical"); Hungarian Prime Minister Viktor Orban claimed that his Dutch counterpart, Mark Rutte, hated him "because Hungary, in his opinion does not respect the rule of law, must be punished financially."
So, the Tuesday morning fudge didn't surprise Brussels observers. "The EU has always been reluctant to act when there is a democratic backslide," says Daniel Kelemen, Jean Monnet Chair in European Union Politics at Rutgers University. "They have previously hidden behind the fact that Article 7 doesn't work and that they don't have the right toolkit, so try and create new mechanisms. The problem with this new agreement is any mechanism Hungary and Poland will vote for will be so watered down and unenforceable in reality."
This could mean that in getting this initial agreement, the EU has put out one blazing house fire while overlooking embers further down the street.
"People often forget that the EU isn't a state in itself with its own powers to enforce laws. The EU's legal architecture holds the whole thing together in some respects. If member states ignore ECJ rulings, threaten judges who implement EU law, it doesn't just threaten democracy; it threatens undermining the whole union," says Keleman.
Ronan McCrea, professor of European Law at University College, London, agrees that this presents a fundamental threat to the integrity of the whole union. "The EU's bureaucracy is really small compared to that of a local English council. This means the EU relies on national judges and civil servants to implement EU law in their own countries."
Earlier this year, Poland passed legislation that permitted the government to discipline judges who made rulings that the government disagreed with. "In any European democracy, judicial independence is crucial. However, if judges fear they are going to be disciplined for ruling against their government, how can they independently stand by EU law," says McCrea.
Kelemen goes further: "If judges are in the pocket of the government, how can another EU state extradite a criminal to a fellow member state? They cannot guarantee that person will receive a fair trial, especially in countries where political dissent is being cracked down on."
While Hungary and Poland might provide much of the focus of concern, they are far from the only EU member states that have flouted some of the EU's core pinciples. And as Kelemen points out, "failing to address this kind of backslide encourages its spread." And the further it spreads, the more leaders who are happy to play loose with democracy end up in prominent positions.
However much leaders in Brussels were toasting European unity on Tuesday morning, it is simply a fact that leaders with these instincts are becoming more assertive at EU-level. And as Hungary proved, they are getting good at playing politics in Brussels.
"Their goal now is to wield influence within the EU while picking up EU money to run their regimes with it," says Kelemen. The bitter reality for those who most value the EU is that those who seek to twist its values no longer seek to run from it, but to run the show.
This article has been updated to correct the spelling of Daniel Kelemen's name.
