Thread by @jfkirkegaard

OK - so what to do now about HU/PL and RoL, since they are obviously not budging? One option is to wait it out and hope the two countries will capitulate, as they need EU money more that Southern members (who have access also to ECB asset purchases). 1/n ft.com/content/b1d3e7…

This strategy has many "institutional merits", as there are huge legal, political and administrative advantages in leaving the current EU-level deal in place IF HU/PL eventually fold first. Maybe they will, but maybe they won't and it might be time for the EU to take out the 2/n

real heavy guns, which when it comes to internal issues (where offering eventual EU membership matters little) usually involves evoking financial market pressure, too. When dealing with non-Euro members, this is less straightforward than was the case with Greece, as the @ECB 3/n

is not available to ever so gently strangle economic activity in the offending country by eventually shutting down the banking system. But there are potentially forceful alternative options available. @MinPres has already aired the extreme option of relaunching the entire EU 4/n

with only 25(?) members fully committed to democracy. Yet, as suggested by @Eurobriefing an intermediate option would be to use EU Treaty's "enhanced cooperation" option among the 25 to relaunch the RRF (and parts of the regular budget) in a way that excludes HU/PL and denies 5/n

access to EU funds permanently, while the 25 (simplified) carry on as planned, albeit in a different institutional setting inside the EU Treaty. This would send the signal to private investors and voters that HU/PL will NEVER get access to more EU funds without submitting to 6/n

RoL rules. Presumably, even Merkel, worried about being remembered by history as the German chancellor who though her persistent permissiveness of HU/PL's autocratic drift (inside the @EPP and elsewhere) "lost Eastern Europe to corruption and authoritarianism" might be coaxed 7/n

into drawing a line in the sand and making it publicly clear to also private investors that HU/PL no longer play on the EU team and that investments here now carry "reputational risks". Given especially Orban's deep ties to large parts of the CDU/CSU establishment, this might 8/n

be a long shot. If so, there is a role also for the EU media, civil society and everyone else who cares about democracy in Europe to play. Investor activism has many roots, but if it is (as is increasingly the case) no longer acceptable for EU MNCs to have plants in Xinjiang 9/n

for human rights reasons, why is it acceptable for EU investors to continue to pump money into increasingly authoritarian countries in the EU? The "threshold for democratic acceptability" is, universal human rights or not, reasonably higher inside the EU than elsewhere. Both 10/n

HU/PL are heavily affected by the 2nd #COVIDー19 wave and now is hence a good time to drive up their cost of foreign capital and - ideally - generate a partial "sudden stop" of also private capital into these countries through a combination of private investor activism, 11/n

boycotts, divestments and - hopefully - official sanctions, too, against HU/PL until compliance with RoL is secured. Won't be pretty - but compared to the alternative of entrenched kleptocratic authoritarianism inside the EU probably necessary. END

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