Hungary and Poland blocked on Monday the adoption of the 2021-2027 budget and recovery fund by European Union governments because it included a clause which makes access to money conditional on respecting the rule of law.
Ambassadors of EU governments at a meeting in Brussels were to endorse a compromise reached on the 1.8 trillion package with the European Parliament, but could not do that because of the veto from Warsaw and Budapest.
The German EU presidency said ambassadors did vote through the link between EU money and the respect for the rule of law, because this vote required only a qualified majority and the opposition of Warsaw and Budapest could not stop it.
But when it came to voting on the 1.1 trillion euro (988.6 billion pounds) budget itself and the 750 billion euro recovery package, which require unanimous support, "two EU member states expressed reservations" the presidency said.
The nationalist governments in Budapest and Warsaw are against linking EU money and respect for the rule of law because they are under a formal EU process investigating them for undermining the independence of courts, media and non-governmental organisations.
If the link, introduced by EU leaders in July and strengthened by the European Parliament, remains, both countries risk losing access to tens of billions of euros in EU funds.
Since without unanimous consent on the 1.8 trillion euro package no EU country can get money, it gives strong leverage to Warsaw and Budapest to pressure others to remove the link.
The blockage means money for economic recovery for all EU countries from the recession brought on by the Covid-19 pandemic is likely to be delayed. It was originally planned to start flowing from mid-2021.
"If you respect the rule of law there is nothing to fear. Denying the whole of Europe crisis funding in the worst crisis since decades is irresponsible," Manfred Weber, who heads the biggest group in the European Parliament said on Twitter.