German Chancellor Angela Merkel and Polish Prime Minister Beata Szydło, in Brussels | Stephane de Sakutin/AFP via Getty Images Berlin looks into freezing funds for EU rule-breakers Germany considers trying to link receipt of EU cohesion funds to respect for democratic principles.

The German government is looking into ways to enable the European Commission to freeze funding for EU member countries that don't comply with the bloc's standards regarding the rule of law.

An official German government position paper on future EU budget rules, which POLITICO has obtained, says Berlin wants to look into “whether receipt of EU cohesion funds can be linked to compliance with fundamental principles of the rule of law.”

The implication would be that a country such as Poland, whose government is currently clashing with Brussels over rule-of-law issues such as the independence of the judiciary, could put at risk its receipt of EU funding for poorer regions, known as "cohesion funds."

Poland is allocated a total of €86 billion from various EU cohesion funds in the current seven-year EU budget that runs through 2020.

The Commission has been trying for more than one year to discipline Poland's Law and Justice (PiS) government for its treatment of the country's highest court and other issues. A defiant Warsaw has hit back at Brussels, accusing Frans Timmermans, the commissioner responsible, of waging a "personal crusade" against the country.

While leading German politicians have tried to remain on the sidelines as much as possible, it is clear that Germany has leverage as the biggest contributor to the EU budget.

On Tuesday, Budget Commissioner Günther Oettinger presented the 2018 EU budget — his first set of numbers since he took over the portfolio last year.

Oettinger's bigger challenge, however, will be drafting the EU's next seven-year budget, or multiannual financial framework (MFF), starting from 2020.

It will be the EU's first post-Brexit multiannual budget, with one big question to be answered: Will the loss of the U.K. as a net contributor mean the budget will shrink, or will someone pick up the tab?

Not if Berlin has anything to do with it: The German position paper speaks of an "additional burden" in order to finance "new challenges" in areas such as migration and security.

"Cuts will affect the future MFF and its expenditures as a whole," says the German position paper, which was adopted by Angela Merkel's government on May 11.

In the paper, Berlin “calls for the use of cohesion policy in order to create additional incentives for the implementation of necessary structural reforms in the member states” without providing additional money — yet another move to link EU subsidies to individual countries' performance on reforms.

It also calls for stricter macroeconomic conditionalities if countries don't comply with EU deficit rules — and attempts to accelerate the implementation of funding cuts for deficit sinners to within one month.