What Defines Success in a Chicken Game? The EU’s Rule of Law Enforcement Through Financial Conditionality

The European Union’s newly established financial conditionality instruments, the Conditionality Regulation (Regulation 2020/2092) and the Recovery and Resilience Facility (RRF), have been regarded as positive forms of leverage to address democratic backsliding within the Union. Nonetheless, their implementation record has sparked considerable controversy: critics claim that superficial reforms in Hungary and Poland have misled the European Commission, whereas supporters argue that the suspension of funds indicates a shift towards greater assertiveness. To understand the strategic environment in which enforcement operates, I conceptualise the enforcement of the rule of law and liberal democratic principles in the EU as a “chicken game” where interaction between the European Commission and governments engaging in backsliding involves high stakes, asymmetric incentives, and escalating brinkmanship. Building on insights from game theory and the literature on enforcement, I develop a theoretical framework to explain the conditions under which the European Commission might escalate enforcement actions and when national governments choose to concede or resist. Through a comparative analysis of the Hungarian and Polish cases, I show that the differing enforcement records should be understood as the strategic outcome of a high-stakes game in which both sides aim to avoid the reputational damage of capitulation. This paper presents a new analytical perspective for understanding the rule of law enforcement and offers broader insights into the politics of conditionality in the EU.