The European Commission urged the EU"s top court to impose daily fines against Poland for failing to comply with an order designed to safeguard judicial independence.
It wants Warsaw to suspend a chamber designed to punish judges for some of their rulings, a move it called “rather exceptional,” on Tuesday.
The Commission confirmed a link between rule of law concerns and the dispersal of Hungary and Poland's pandemic recovery funds.
Budapest and Warsaw are still waiting for their so-called "Recovery and Resilience" plans to be approved by the Commission, to receive billions of euros in European taxpayers' money.
But after months of stalling, the European Commissioner for Justice Didier Reynders confirmed the connection between funds and questions over democratic abuses.
"There is a link between the [recovery] plans and the country specific recommendations in the European semester. And if you look at the country specific recommendations, you will see that, with Poland, we have put some remarks on the independence of the justice system," said Reynders.
"About Hungary, there are remarks about the way to organise the fight against corruption and so it's very important now to clarify the situation and to see if there are positive evolutions in both cases, as we discussed with all the other member states. So, it will be possible for the Commission to put some conditions to adopt the different plans," he added.
Concerns over the rule of law in both countries are longstanding. In Hungary, corruption and media freedom are among the issues highlighted. In Poland, judicial independence is one of the main concerns.
Both Budapest and Warsaw have denounced the holdup of funds, claiming it was ideologically motivated. But Timothy Garton Ash, a professor of European Studies at the University of Oxford, told Euronews that this isn't the case and that the EU must do more.
"Viktor Orban is having his cake and eating it. He is winning elections by saying "Stop Brussels campaigning against the European Union", but taking billions of European taxpayers' money. Therefore, the key to an effective response is to establish a linkage between the Europe of values and the Europe of money. And that's what the European Union so far failed to do," the professor noted.
European Commissioner for Trade Valdis Dombrovskis said the Commission was looking into certain rule of law elements subject to parallel in the context of rule of law challenges identified in Hungary.
The Commission agreed upon the extension of the assessment period by the end of September.
"It's too early to say more on this, but for the moment we are working on the infringement proceedings. We are working with some suspensions due to the situation with LGBTQI-free zones, but then we will continue to analyse the situation in the recovery and resilience plans," Dombrovskis said.
Separate discussions and procedures between Hungary and the European Commission are also expected.
Watch the full video report in the player above.