Jean-Claude Juncker, the president of the European Commission, has rejected a German proposal to make EU funding contingent on member states’ adherence to democratic principles and human rights — an increasingly charged issue in countries such as Poland and Hungary.

The proposal was contained in an internal German government paper, seen by the FT, that deals with reforming the EU after Britain leaves the bloc. It says the European Commission should examine whether the receipt of EU funds “could be linked to [a country’s] compliance with the fundamental principles of the rule of law”.

Asked at a conference in Berlin if he supported the idea, Mr Juncker said: “I am of the opinion that one should not do that.” He added that the proposal would be “poison for the continent”.

The funds referred to in the German paper are supplied under the EU’s so-called “cohesion policy”, which provides funding for everything from tourist sites in Bulgaria to motorways in Slovakia. Such funding is the EU’s main tool for trying to even out the often large economic discrepancies between countries in the bloc.

The bulk of the funds — which at €350bn account for roughly one-third of the EU’s budget between 2014 and 2020 — are spent in poorer countries in central and eastern Europe.

The goal is to increase the EU’s credibility by incentivising compliance with human rights and the fundamental principles and values of the rule of law

The idea of using funds as a way of reining in the excesses of illiberal governments is not new. For years, officials and lawmakers in Brussels have discussed cutting funds to Poland, Hungary and other states for allegedly trampling on EU rules.

At an EU summit this year, a row broke out between Polish prime minister Beata Szydlo and François Hollande after the then French president broached the idea.

“I will not accept blackmail from a president with an approval rating of 4 per cent who is about to leave his office,” Ms Szydło said at the time. Poland is the biggest recipient of EU funding, having been promised more than €100bn in total between 2014 and 2020.

Tanja Alemany Sanchez de León, spokeswoman for the German economics ministry, said on Wednesday that the release of such funds was already conditional on countries’ carrying out certain structural reforms and that Germany thought this conditionality should now be expanded. She stressed that if the proposal were adopted, it would only apply after 2020.

“The goal is to increase the EU’s credibility by incentivising compliance with human rights and the fundamental principles and values of the rule of law,” she said. “Ultimately it’s about improving the quality of life of EU citizens in all EU countries.”

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