This paper discusses the strengths and weaknesses of the rule of law conditionality contained in the Proposal for a Regulation on the protection of the Union’s budget in case of generalised deficiencies as regards the rule of law in the Member States. The proposed Regulation establishes a link between a Member State’s violation of the rule of law and the suspension of EU payments. The text examines the effects of the connection between the rule of law and EU money, both for the erring Member State and for the EU as a whole. The discussion shows that, despite the fact that the EU-level approach to the rule of law has significant benefits, it, at the same time, creates new risks. It may undermine the balance of powers in the EU by expanding the political and economic power of certain Member States over others, the power of EU institutions over Member States, and the power of the European Commission over other EU institutions. It is also questionable whether there is a sufficiently strong causal relation between the rule of law deficiency and threats to the EU’s financial interests. Most importantly, it is uncertain to what extent the rule of law conditionality will lead to the true transformation of negative, anti-rule-of-law trends in some Member States, which raises the question of whether the Rule of Law Proposal is capable of responding to the current challenges.
Keywords: rule of law, conditionality, legal basis, sufficiently direct link, Art 7 TEU, Commission, Hungary, Poland.