Brussels Behind the Scenes: Vetoing vetoes

Sometimes, EU countries have to unanimously agree on a new policy or position to make it legally binding. That means everyone has a potential veto. But there is a way to get around obstructive governments and this technique may be used more and more in the future.

Issues like foreign policy and tax matters require unanimous agreement to be written into EU law, which over the years has thrown up some unfortunate examples of individual countries blocking all the other member states from moving forward.

Vetoes prevent the EU from having a common position on Kosovo, they have torpedoed efforts to tax big tech companies like Facebook and they have put the brakes on more ambitious climate policies.

For a lot of the nuts and bolts of EU decision-making, qualified majority voting applies so no single government can dictate the direction of the entire bloc by refusing to play nice with all the other members.

BRUSSELS BEHIND THE SCENES is a weekly newsletter which brings the untold stories about the characters driving the policies affecting our lives. Analysis not found anywhere else, Sam Morgan helps you make sense of what is happening in Brussels. If you want to receive Brussels behind the scenes straight to your inbox every week, subscribe to the newsletter here.

Years ago, vetoes were more of a nuclear option. Multilateralism and intergovernmental bodies arguably worked a little more harmoniously and pragmatically than they do currently, given the polarised political landscape that has shifted how countries do business.

Now, they are more like an established norm. The EU’s attempts to sanction Russian energy were severely hampered by Hungary in particular and the final deal included a plethora of loopholes and weak measures.

That is why it was no surprise that Hungary decided to block the EU’s plan to sign up to the OECD’s global minimum tax on big corporations. Viktor Orban’s government insisted that the 15% levy would hurt European competitiveness.

Poland had first threatened to strike down the deal after also citing concerns about the tax’s impact on business but eventually relented after the European Commission controversially moved forward with Poland’s recovery fund application.

Orban’s regime must have thought that what is good for Warsaw is good for Budapest, so also rolled back its support for the OECD initiative, hoping to extract similar concessions from Brussels.

But Hungary may have finally overplayed its hand as other countries lose patience and consider alternative ways to make decisions.

Neutralised veto

Many advocates of EU reform say that one of the main obstacles to building a better Union is the very existence of the Council veto. Individual countries can hold the entire bloc to ransom, making it impossible for Europe to compete with the US, China and so on.

There is a lot of merit to that logic. Poland derailed an ambitious climate plan all the way back in 2012 and Cyprus prevented the EU from slapping heavier sanctions on Belarus after a rigged election result. Those are just two of many examples.

An EU that can push through decisions using qualified majority voting could react faster to quick moving events and act more decisively in areas like climate change. Consensus building would come back into vogue, perhaps creating a healthier politics.

But opponents to this school of thought make the point that when it comes to the big decisions – completely retooling the economy around green policies, sanctioning non-EU states – the bloc has to be completely on the same page.

QMV also penalises member states with smaller populations, as their vote is watered down. It also breeds resentment in the ‘losing’ countries. Central and Eastern European states never got on board with migration policies post-2015 partly because of how it was agreed.

Legal experts say that it would not take treaty changes – which require unanimous voting – to get rid of unanimity, as it could be diluted by triggering special clauses already built into the rules that underpin the EU’s architecture.

But it still smells a lot like ‘turkeys voting for Christmas’. So what can be done? Hungary’s vetoing of the tax deal may yet prompt other countries to embrace another peculiarity of EU diplomacy: enhanced cooperation.

This is a special tool that allows a band of at least nine EU members to work together in areas where it is clear that the bloc as a whole will not reach an agreement. It cannot contradict existing EU law and the Commission must assess its impact on the single market.

It has already been used in areas such as divorce law, patents, defence cooperation and public prosecutions. The Schengen passport-free zone is also a form of enhanced cooperation between certain EU members.

Enhanced cooperation is ultimately meant to allow countries to move forward with policies that are blocked by other states that cite legitimate reasons for their opposition.

Nordic countries do not take part in the divorce law mechanism because they fear it would affect their existing liberal legal systems. Denmark and Ireland have opt-outs from certain justice policies so do not participate in the EPPO.

Hungary’s OECD veto is of course not about taxation at all but another chapter in its ongoing spat with Brussels over rule of law matters and funding. So enhanced cooperation may not be a viable avenue given that it takes many years to set it up.

Normal diplomatic efforts will be made and Hungary will likely eventually be appeased somehow, as this is the current EU modus operandi. But enhanced cooperation is still an option and may yet be deployed in other areas.

It will have to be deployed wisely, as too much enhanced cooperation could lead to the ‘two-speed Europe’ that smaller and poorer member states fear will be built around a core of richer EU countries.

There is a place for it though. As so many obstructive governments over the years have pointed out, not everybody has the same starting point or resources to deploy certain policies. But that is no reason to pander to the lowest common denominator.

BRUSSELS BEHIND THE SCENES is a weekly newsletter which brings the untold stories about the characters driving the policies affecting our lives. Analysis not found anywhere else, Sam Morgan helps you make sense of what is happening in Brussels. If you want to receive Brussels behind the scenes straight to your inbox every week, subscribe to the newsletter here.