European leaders for the first time on Tuesday agreed to link payment of EU funds to a member state with respect for the bloc’s legal norms, although Poland and Hungary insisted they had blocked tougher planned measures.

A hard-fought deal on a 750-billion-euro coronavirus recovery package and the EU’s seven-year budget includes powers to cut funding from countries that breach so-called “rule of law” standards.

“It is the first time that the respect for rule of law is a decisive criteria for budget spending,” EU Council President Charles Michel, who chaired the marathon summit, told reporters.

The final text is a compromise between northern countries that wanted all money stopped to governments that break the rules, and Hungary and Poland, which are under investigation for allegedly undermining European legal standards and democratic values.

Poland and Hungary had threatened to veto the EU’s entire budget package if there was any linkage between funding and rule of law but, as the talks continued through a fourth night, a deal was finally reached.

Under the agreement, the European Commission, which oversees rule of law complaints, would propose punitive measures to the EU Council, which represents member states.

Any cuts would have to be approved by a qualified majority of those member states