EU considers blocking Slovakia’s funds over democratic backsliding - Bloomberg

The European Commission has prepared a decision to initiate proceedings in response to Slovak Prime Minister Robert Fico’s decision to dismantle a special prosecution office that handled corruption cases related to EU funds, sources familiar with the matter have informed the agency.

The process is in its early stages and will require approval from Commission President Ursula von der Leyen.

Approximately 80% of all public investments in Slovakia are funded by EU funds. Any potential issues with this funding would be a significant blow to the EU and Eurozone member states, which are already grappling with excessive fiscal deficits.

One proposal involves the Commission using its so-called conditionality mechanism, which allows the EU to freeze funding when it perceives that its money is at risk. This would enable the EU to withhold part of the 12.8 billion euros ($14.2 billion) in cohesion funds allocated to Slovakia in the bloc's budget, sources reported.

The Commission is also considering the possibility of withdrawing all or part of the 2.7 billion euros in COVID relief grants that Slovakia received under the EU's pandemic recovery spending, according to one agency source. The special prosecution office was a condition for the distribution of these funds.

Slovakia would become the second country subject to the EU's conditionality mechanism after the bloc froze 6.3 billion euros in cohesion funds for Hungary due to Budapest's violations of the rule of law.

Earlier reports indicated a sharp reduction in the number of Ukrainians receiving housing compensation in Slovakia. Since July, aid is provided only for the first 120 days.

Slovakia, along with Hungary, has refused to endorse Ukrainian strikes against Russia using Western weaponry provided to Kyiv. Both countries are governed by pro-Moscow regimes.