By Gabriela Baczynska
BRUSSELS (Reuters) - Germany's entry alongside France into a battle between the European Commission and Poland over the rule of law increases the likelihood of unprecedented EU action to punish Warsaw.
German Chancellor Angela Merkel abandoned her usual public restraint last week by criticizing Poland's governing Law and Justice (PiS) party, showing the European Union's executive has the firm backing of its most influential member.
It may be a watershed moment in the dispute over an overhaul of the judiciary and other steps taken by PiS which Brussels says undermine democracy in the largest ex-communist EU state.
Poland risks a reprimand under procedures known as Article 7 that have never been used before and would deal a heavy blow to its prestige, deepen its isolation in the bloc and diminish its ability to influence EU policies.
Much is also at stake for the EU. The row has deepened divisions as the EU comes to terms with Brexit and failure to act against a member seen as flouting democracy could raise questions about its determination to defend its core values.
"As much as I wish for good relations with Poland -- they are our neighbor and I will always strive for this given the importance of our ties -- we can't simply keep our mouth shut in order to keep the peace," Merkel said in Berlin.
"This goes to the very foundations of our cooperation within the European Union."
For a decade after it joined the EU in 2004, Poland was the poster child of the bloc's eastward expansion as it was seen as faithfully upholding the EU's democratic values and its economy thrived.
But relations have deteriorated rapidly since the eurosceptic PiS led by former prime minister Jaroslaw Kaczynski, long a political foe of European Council President Donald Tusk, won power in late 2015.
BATTLE OVER JUDICIAL REFORMS
The Commission opened an inquiry into the rule of law in Poland in January 2016 after new legislation put more power in the hands of the Warsaw government, a move seen in Brussels as weakening democratic checks and balances.
The main battle now is over reforms that the Commission says undermine the judiciary's independence, giving the justice minister discretionary power to prolong the mandates of judges at retirement age and dismiss and appoint court presidents.
In another unprecedented development, Warsaw has also ignored a ruling by the EU's top court by continuing with large-scale logging in an ancient forest.
Until now Berlin has let French President Emmanuel Macron take the lead on Poland since he took office last May. He says Warsaw is isolating itself and shunned Poland and its close EU ally, Hungary, during a recent tour of eastern Europe.
But Merkel, who will seek a fourth term as chancellor in an election on Sept. 24, showed her concern by speaking out against Poland last Tuesday and by discussing Poland last week with the head of the Commission, Jean-Claude Juncker.
A diplomatic source said their talks included discussion of how quickly to proceed in the row with Warsaw.
PiS denies accusations by the Commission, Western EU states, political opponents in Poland and rights groups that it is eroding democracy in the country of 38 million people.
"Some EU politicians have made comments most recently that are unjust on Poland. That is why I want to stress that Poland is a democratic country, based on the rule of law," Prime Minister Beata Szydlo said in video footage released last week.
Filmed standing in front of Polish and EU flags, she said: "Let's not allow particular interests of particular countries to overshadow the chief current task, which is to guarantee security to the people of our continent."
The Commission has the option of triggering Article 7, which would mean asking all 27 other EU states to declare that PiS is putting democracy at risk.
But imposing sanctions would require unanimity among the other member states and Hungarian Prime Minister Viktor Orban has made clear he would shield Warsaw from the maximum punishment -- stripping it of its EU voting rights.
Commission deputy head Frans Timmermans said last week he would propose opening Article 7 if Poland starts dismissing Supreme Court judges, adding: "We are very close to triggering Article 7."
But he also said Brussels was waiting to see what proposals Polish President Andrzej Duda makes on two judiciary laws, including on the Supreme Court, proposed by PiS after he vetoed them in July. Two others have been signed.
His comments indicate Warsaw still has a last chance to escape Article 7. No formal decision is likely before the EU leaders meet for a Brussels summit in October at the earliest.
One EU official said Article 7 "is where this seems to be heading" but added: "Nobody likes to single out a member state like that. Everyone has their sins and this creates a dangerous precedent - what if you are going to be the next one?"
(Additional reporting by Krisztina Than and Gergely Szakacs in Budapest, Tatiana Jancarikova in Bratislava, Andreas Rinke, Paul Carel and Noah Barkin in Berlin, Richard Lough and Michel Rose in Paris, Editing by Timothy Heritage)