Slovakia seemingly unfazed by EU funding freeze threat

Quoting unnamed sources, Bloomberg reported in early September that the European Commission is preparing to launch the process that would result in the freezing of over €15 billion (US$16.7 billion) in funds earmarked for Bratislava.

The funds in question would reportedly include €13 billion in cohesion funds and possibly €2.7 billion in recovery and resilience funds.

The European Commission has been concerned about the rule of law in Slovakia ever since populist Prime Minister Robert Fico began a fourth term last October.

Ousted from his third stint in office six years ago during the anti-government backlash after the assassination of journalist Jan Kuciak, Fico and many linked to his nominally left-leaning Smer party then found themselves embroiled in probes into corruption and organized crime.

Fears of a democratic backslide in Slovakia

His first moves after returning to power last year were to start dismantling the special prosecution and police units running the cases and to overhaul the criminal code.

The European Commission swiftly launched a dialogue with the Slovak government. The EU executive is also examining the government's bid to increase state control of Slovakia's public media.

Fico has sought to reassure Brussels that his reforms are in line with EU values and even offered some concessions.

A spokesperson for Slovakia's Foreign Ministry pointed out to DW that the government has responded to the European Commission's concerns and made amendments accordingly.

However, having been led a merry dance over the years by Fico's ally Hungarian Prime Minister Viktor Orban, who has openly spoken of his tactics to pull the wool over the eyes of the EU regarding his "illiberal" regime, it appears that the Commission is on its guard regarding Slovakia.

Commission analyzing recent reforms

A spokesman for the Commission told DW that although no decision on freezing funds for Slovakia has been taken or is awaiting political approval, Brussels "is analyzing the recent reform of the criminal code."

The spokesman went on to say that the "Commission will not hesitate to take further action" should its criteria for the conditionality mechanism be met. This is a regulation that allows the bloc to freeze EU funds at risk of abuse due to weakness in the rule of law.

"It seems Brussels might be more willing now to take action, unlike in the case of Hungary, which took years," Albin Sybera of Visegrad Insight suggested during a recent online debate organized by the think tank entitled: "How the nationalist agenda is shaping Slovakia's future."

Slovak government says report is false

Perhaps more to the point, several analysts note, the 2022 suspension of close to €28 billion in funds to Hungary was a first.

Not only did it take a while to dawn on Brussels that a member state could actually be retreating from democracy amid protracted efforts to persuade Budapest to change tack, it also took time to agree, develop and implement the conditionality mechanism.

Now in place, the mechanism appears to offer Brussels potentially significant leverage in cases where the Commission decides to apply it.

Noting that the government has "been in intense contact with the [European Commission] for a long time on this matter," the Foreign Ministry in Bratislava insisted that "The [European Commission] has not formally or informally announced such action."

"The Slovak Republic rejects the dissemination of false information about stopping EU funds," it went on.

Fico's fiscal challenge

Nevertheless, Fico has to take the threat of losing EU funds seriously.

The populist parties in Slovakia's government coalition need to keep the promises that helped push them across the line in last year's election — a task rendered more difficult by the fact that the country's coffers are in a perilous state.

So, while the recently presented budget for 2025 will raise pensions, its main thrust is a sweeping consolidation package that seeks to cut the national deficit by €2.7 billion.

Any cut in the flow of money from Brussels would only further complicate the effort to keep government supporters happy.

Freeze in funds would hit hard

It would also alarm a population that has been conditioned to believe that cash is the one good thing about EU membership.

"Slovaks have been fed the message since before joining [the bloc] that the EU simply means money," Eva Mihockova of the Slovak Foreign Policy Association told the online debate.

And with around 80% of public investment powered by Brussels, the impact of any freeze would be very noticeable.

"In front of every public building or along every motorway, information boards note the use of EU funds. Without them, even supporters of the government parties would notice the decline. Fico cannot afford that," Radoslav Stefancik at the University of Economics in Bratislava told DW.

Fico's 'flexibility'

Like Viktor Orban and other populist nationalists, Fico has shown over the years that his politics are more opportunistic than ideological. While known for aggressive tub-thumping at home, he tends to fall into line when in Brussels.

"Fico has wonderful flexibility that he has used to secure political survival," Visegrad Insight Fellow Aliaksei Kazharski said during the think tank's online debate.

This explains why the Slovak PM told Commission President Ursula von der Leyen of his planned changes to the criminal code almost as soon as he returned to office in October and has kept the discussion going ever since, making several tweaks to the amendment bills, which entered into force in August.

But the changes are far from fundamental, suggesting that the idea is to keep kicking the can down the road while he deals with his number one priority: immunity for himself and his associates from charges of corruption and criminality, which he narrowly escaped in 2022.

Looking out for number one

"Fico is totally pragmatic and always does what serves his interests," says Mihockova. "Right now, his interests do not match those of Brussels, and the rule of law and democracy stand in the way of securing this immunity."

Despite the reports that a freeze in funding is being considered, the government has just unseated Michal Simecka, leader of largest opposition party, Progressive Slovakia, as deputy speaker of parliament.

It's a move that Milan Nic at the German Council on Foreign Relations says might only draw more attention and scrutiny from Brussels.

"Fico's politics of personal revenge might backfire at the level of the European Parliament," he suggested to DW, pointing to the upcoming hearings for European Commission nominees.

However, given the years of patience shown by the Commission and European Council with Orban, Fico might feel confident that he can keep them at arm's length for the time being.

"Once he and his people are out of danger, Fico will be free to make concessions to Brussels," says Stefancik.

Edited by: Aingeal Flanagan