By Joanna Plucinska and Gergely Szakacs
WARSAW/BUDAPEST (Reuters) - Hungary's foreign minister declared victory on Wednesday in a row over linking European Union funds to rule-of-law standards, as Budapest and Warsaw appeared to be edging toward an agreement to unblock an EU financial package.
Poland and Hungary have been blocking the 1.8 trillion euro ($2.18 trillion) 2021-2027 EU budget and coronavirus recovery fund drawn up for the 27 member states because their nationalist governments oppose a clause linking the release of funds to rule-of-law standards.
But on Wednesday a compromise appeared to be close.
"We have just received news that access to EU funds due for Hungary cannot be linked to political or ideological conditions," Hungarian Foreign Minister Peter Szijjarto said in a Facebook (NASDAQ:FB) video on Wednesday. "We can declare victory. We have been successful because we have fought."
Earlier in the day a Polish official said the countries had provisionally accepted an EU budget proposal from the bloc's German presidency and were awaiting further approval from the Netherlands and other sceptical member states.
The issue is to be discussed on Thursday at an EU summit.
A senior EU diplomat said ambassadors of member governments were positive on Wednesday in their first review.
"An in-depth analysis in EU capitals is now beginning and the final decision will be taken by the European Council," the diplomat said, referring to the meeting of all EU government leaders on Thursday.
Under the deal, the rule of law regulation making access to EU money conditional on respecting the rule of law would remain unchanged, the diplomat said.
But Warsaw and Budapest would receive assurances from EU leaders in an explanatory declaration that the regulation would be applied objectively and could be tested before the EU's top court before implementation, the diplomat said.
"Budget negotiations are ongoing, but it seems we will reach an agreement that will satisfy us," Poland's deputy parliament speaker, Ryszard Terlecki, told the state-run news agency PAP.
Hungarian Prime Minister Viktor Orban wrote on his Facebook page that he was leaving for Brussels for "meetings tonight, D-Day tomorrow".
DIVISIONS
Poland's United Right ruling coalition has been split over whether to stick by the EU budget veto, with speculation that one of the junior partners could leave the government.
Polish Deputy Prime Minister Jaroslaw Gowin, who heads the more moderate junior coalition partner Accord, said that if a compromise on the rule-of-law condition for the sake of Poland's economy proved beyond reach, early elections would be needed.
Gowin said that Poland, one of the EU's biggest budget beneficiaries, stood to lose as a result of a veto.
However, Justice Minister Zbigniew Ziobro, leader of the other junior coalition partner, the right-wing United Poland, warned of "a significant limitation of Polish sovereignty and a breach of European treaties" from the rule-of-law regulation.
The EU has long been at odds with the nationalist governments in Warsaw and Budapest, which Brussels accuses of flouting democracy standards by imposing political controls over the judiciary, media and other institutions.
Poland and Hungary deny such policies threaten the rule of law and cast the issue as meddling in their internal affairs.
The European Commission website says Hungary's budget would receive at least a net 4 billion euros under the recovery fund.
A Commission source said the net benefit to Poland would be around 65 billion euros.
(1 euro = 4.4294 zlotys)