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EU lists rule-of-law concerns for Hungary, Poland, could withhold funds

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BRUSSELS, July 20 (Reuters) - The European Commission listed on Tuesday serious concerns about the rule of law in Poland and Hungary in a report that could help determine whether they receive billions of euros in EU funds to help recover from the coronavirus pandemic.

The EU executive had already raised many of the concerns in a report last year but they may now have real consequences as Brussels has made access to its recovery fund of grants and loans worth a total 800 billion euros conditional on observing the rule of law.

The Commission said Poland and Hungary were undermining media pluralism and court independence. They are the only two countries in the 27-member bloc under formal EU investigation for undermining the rule of law.

"The Commission may take into account the Rule of Law report ... when identifying and assessing breaches of the principles of the rule of law that affect the financial interests of the Union," the Commission said in a statement.

There was no immediate reaction from Warsaw and Budapest to the criticism in the Commission report.

The EU executive has already delayed its approval on 7.2 billion euros for Hungary in an attempt to win rule-of-law concessions from Prime Minister Viktor Orban's government and has not yet given the go-ahead for 23 billion euros in grants and 34 billion in cheap loans for Poland.

JUDICIAL INDEPENDENCE

The report said Hungary had not followed the Commission's request to strengthen judicial independence and that its anti-corruption strategy was too limited in scope.

In a decade in power, Orban has partly used billions of euros of state and EU funds to build a loyal business elite which includes some family members and close friends.

The Commission cited persistent shortcomings in Hungarian political party financing and risks of clientelism and nepotism in high-level public administration.

Significant amounts of state advertising go to media supporting the government, while independent outlets and journalists face obstruction and intimidation, it said.

The report also expressed concern over the influence of Poland's nationalist ruling Law and Justice party (PiS) over the justice system.

It listed illegally made appointments and changes by PiS to the constitutional tribunal and other bodies, and Warsaw's rejection of EU court rulings binding for every member state.

The Commission noted that the prosecutor general, responsible for tracking down state corruption, was at the same time Poland's justice minister and an active PiS politician.

Since last year the professional environment for journalists in Poland has deteriorated because of "intimidating judicial proceedings, growing failure to protect journalists and violent actions during protests, including from police forces", it said.

Reporting by Jan Strupczewski Editing by Gareth Jones
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