The top European Union court ruled on Wednesday that the EU can withhold funding from member states that fail to uphold its rule of law principles, giving the bloc a powerful tool to enforce its democratic values.
"The European Union must be able to defend those values, within the limits of its powers," the European Court of Justice said in the ruling. The decision by the Luxembourg-based court cannot be appealed.
"Today's judgments confirm that we are on the right track," European Commission President Ursula von der Leyen said when announcing how the bloc would proceed in the next couple of weeks.
The European Commission approved a rule 14 months ago allowing it to withhold funds from member states that deviate from European legal standards. It waited for the court's ruling to move forward.
Hungary and Poland, the most likely targets of the rule, have disputed the EU's right to make such judgments, declaring them as illegitimate and an overstepping of authority. Both countries have faced severe criticism by EU members for their implementation of policies suppressing media rights and LGBTQ rights, and restricting judicial independence.
"The ruling is another application of pressure against our country because we passed our child protection law during the summer," said Hungarian Justice Minister Judit Varga, referring to legislation that forbids minors from obtaining media content that depicts homosexuality or gender transitioning.
"We need to defend ourselves against an attack on our sovereignty," said Polish Deputy Justice Minister Sebastian Kaleta. "Poland has to defend its democracy against blackmail that aims to take away our right to decide about ourselves."
The two countries are most directly affected by this new ruling. Being major recipients of EU funds since joining the bloc in 2004, Hungary and Poland have received billions in aid to rebuild their economies.
The court has argued that state members' democratic backsliding impacts both the budget and political matters of the 27-member union.
EU admission criteria require that a candidate nation embrace respect for democracy and rule of law principles. In its ruling, the court said a state cannot abandon those standards once it achieves membership.
"The court specifies, first, that compliance with those values cannot be reduced to an obligation which a candidate state must meet in order to accede to the European Union and which it may disregard after accession," it said.
Hungary and Poland have threatened to stall EU decisions requiring unanimity on issues such as foreign policy, climate, and energy, in efforts to retaliate, according to the Reuters news agency.