The European Union has a dismal track record when it comes to disciplining countries within its ranks. But this month it opened several new fronts in its increasingly contentious battle with its own member countries over the bloc’s core values. The EU threatened Poland with daily fines and frozen payouts in disputes over LGBTQ discrimination and judicial independence. Driven by several prime ministers, the bloc is harnessing powerful new budgetary tools in an unprecedented push to compel Poland and Hungary to reverse moves that undercut the rule of law or lose access to billions of euros. This account of how the EU finally decided to take on Hungary and Poland is based on interviews with diplomats and officials briefed on conversations among leaders and the debate within the bloc’s executive. The push crystallized at an emotional EU summit in June, when Hungarian Prime Minister Viktor Orban was taken aback by the fervency and unity of other leaders on the LGBTQ issue, and Sweden’s Stefan Lofven pointed colleagues toward how the EU could leverage its budget to bring the rogue nations to heel.