Romania axes 87 bonuses for EU funds

Romania's new public-sector pay law, published today, removes 87 of 151 bonus categories for state employees and caps the remaining allowances at 20% of base salary (Digi24). Parliament has until July 1 to pass it if Bucharest wants to release more than €700 million from the Recovery and Resilience Facility, the EU's post-pandemic fund where money is paid only when governments complete agreed reforms.

The pressure is familiar to any small member state that treats EU money as part of domestic policy, not as a Brussels extra. The lever is simple: no reform, no payment. In Romania's case, unions, magistrates and court clerks are now trying to stop the reform before the cash moves. At least four other member states face the same collision between local resistance and EU conditions. They also face the same date: August 31, the legal cutoff after which the European Commission automatically reduces unspent RRF allocations.

Willing governments, unwilling countries

Romania's governing coalition has the votes. The harder question is whether it can carry the state with it. Police unions have promised to "block implementation by all legal means." Magistrates say the reform would cut their salaries by roughly 11%, breaching judicial independence. A Bucharest court has already ordered the government to pay judges' salary arrears, with daily penalties if it fails to comply (Romania Insider).

In Budapest, the obstacle is inside the state itself. Hungary's new government under Péter Magyar wants to move, but institutions built under Viktor Orbán have not disappeared. Courts still operate under previous-regime appointees. University foundations created to channel state assets remain in place. Magyar must satisfy 27 rule-of-law "super-milestones" on judicial independence, anti-corruption and procurement transparency before any of Hungary's €10.4 billion allocation can be paid. So far, not a single euro has been disbursed (Portfolio, Euobserver).

Where Romania and Hungary are struggling to meet the conditions, Portugal is changing the machinery that checks them. Lisbon has already received much of its allocation. It now proposes raising the Court of Auditors' scrutiny threshold from €750,000 to €10 million, which would exempt most public contracts from checks before they are signed. The Court's president warned this would create "zones without oversight" worth billions each year. The body meant to audit EU spending is being weakened in the name of faster delivery.

The European Parliament took a harder line on Slovakia. On May 20, MEPs voted 347 to 165 to call on the Commission to consider freezing Slovak funds, pointing to abolished anti-corruption bodies and suspected fraud involving rural development money (European Parliament, Denník N). The resolution has no legal force. But it landed days after the Commission had already cut Slovakia's allocation following a fraud investigation by OLAF, the EU's anti-fraud office.

For Maltese readers, the rule-of-law language is not theoretical. Since Daphne Caruana Galizia's assassination and the public inquiry that found the state bore responsibility, EU mechanisms on judicial independence, corruption and oversight have been read here through lived experience. The argument across these cases is not whether Brussels likes a government. It is whether public money can be paid when the institutions meant to protect it are weak, captured or being redesigned.

The precedent Poland set

Poland hangs over all four cases. In February 2024, the Commission unfroze €137 billion for Warsaw after Donald Tusk's government took office, even though no judicial reform laws had yet passed. A "plan of action" was enough (European Papers).

Two years later, Poland's President Nawrocki has vetoed the key judiciary bills. Judges have challenged the unfreezing before the EU's top court, where a senior legal adviser has already questioned whether the milestones were adequate. This is the first serious legal test of how much room the Commission has under the RRF to treat political promises as completed reform.

Who decides when the deadline hits

The RRF gives the Commission very wide discretion to decide whether a reform "satisfactorily fulfils" its milestone. There is no formal channel for domestic actors such as unions, courts or professional associations to challenge that judgment (Verfassungsblog). No RRF milestone has ever been formally rejected.

That is the mechanism behind the August deadline. Romania's unions cannot legally block the pay law. Hungary's inherited institutions may simply move too slowly. Portugal is thinning out the watchdogs that should audit EU spending. Slovakia is brushing off parliamentary pressure. Poland has already shown that a friendly government can unlock billions on promises.

On August 31, the Commission will have to show whether conditionality is a binding instrument or another EU deadline that can be negotiated around.