Poland Moves to Defuse Multiple EU Disputes Amid Mounting Fines

(Bloomberg) -- Poland sought to take a step back from its increasingly costly conflict with the European Union by proposing a plan to scrap a controversial mechanism that disciplines judges and ending a separate row over a brown coal mine near the Czech border.

The disputes have cost the country millions of euros in daily fines, while 36 billion euros ($40.6 billion) from the EU's pandemic stimulus has been frozen due to democratic backsliding. The ruling nationalist Law & Justice Party has lost support, and the aid could boost its fortunes in time for elections next year.

Following a months-long stalemate with Brussels, President Andrzej Duda proposed a draft bill on Thursday that would scrap a judicial disciplinary chamber that the EU's top court has ruled illegal. Separately, the governments in Warsaw and Prague reached an agreement to end a lawsuit over the Turow lignite mine, which has triggered fines that Poland has refused to pay.

“I want to give the government a tool to end the dispute with the European Commission,” Duda said in a statement to reporters in Warsaw after announcing his proposal. “This dispute is not what Poland needs right now.”

Duda's announcement boosted the zloty. But it wasn't immediately clear whether it'll find enough support in parliament, or even within the ruling party. The government has for months promised and failed to come up with a solution due to disagreements withing the ruling coalition, where Justice Minister Zbigniew Ziobro has taken an increasingly confrontational stance toward the EU.

The president's plan to replace the chamber with a panel of 11 judges may also fail to sway the EU's executive. European Commission President Ursula von der Leyen set out three conditions for releasing the aid that Poland has requested from the bloc's post-pandemic recovery fund. Besides scrapping the chamber, it must also restore judges to jobs lost as a result of disciplinary procedures.

Too Early

The Commission's spokesman, Eric Mamer, said on Thursday it was too early for the EU executive to comment as it needs to see the proposal first.

The bloc's top court hit Poland in October with a record 1 million-euro daily fine over the government's sweeping judicial reforms, prompting accusations of “blackmail” from Warsaw. It also imposed a daily fine of 500,000 euros in September for not halting operations at Turow, which the Czechs said caused environmental damage on their side of the border.

Speaking at a news conference with his Czech counterpart on Thursday, Prime Minister Mateusz Morawiecki said the agreement reached in Prague will pave the way for Warsaw to avoid additional penalties. Hours earlier, a non-binding EU court opinion told Poland its refusal to shut the mine violated EU law.

Poland's attempt to patch up its fraught relations with the EU comes as the ruling party has been reeling from a botched tax overhaul, a brewing spying scandal and discontent over surging inflation.

“Today both President Duda and Prime Minister Morawiecki are scrambling to find a quick fix,” Krzysztof Gawkowski, a lawmaker for the opposition Left party told reporters. “Why? Because the money in the Polish budget is running out, the wallet has become thin, because there is no money from the European Union.”