On Thursday 28 May, the European Commission detailed the REACT-EU Regulation, Act III of its measures to respond to the Covid-19 crisis under the cohesion policy, providing 55 billion euros in 2018 prices (58.27 billion euros in current prices).
The proposal “is based on cohesion policy and it bridges the moment from what we have done in the present multiannual financial framework moving into the next generation”, said Cohesion Policy Commissioner Elisa Ferreira. Presenting the proposal to the press, she recalled that cohesion policy had been one of the first policies to respond to the pandemic.
The proposal for a Regulation establishing the Recovery Assistance for Cohesion and the Territories of Europe (REACT-EU) instrument is a follow-up to the CRII and CRII+ investment initiatives in response to the coronavirus, which are expected to generate at least 37 billion euros (see EUROPE 12460/3).
The REACT-EU package provides for a total of 55 billion euros in additional funding for the European Regional Development Fund (ERDF), the European Social Fund (ESF) and the Fund for European Aid to the Most Deprived (FEAD) for the period 2014-2020 (see EUROPE 12494/2). These additional funds will be provided and concentrated on the first two years of the cycle.
In 2020, a “targeted” revision of the 2014-2020 financial framework should already free up five billion euros. More specifically, the Commission proposes that 50% of the additional REACT-EU resources for this year be paid to Member States as pre-financing, immediately after the approval of the changes to the programmes concerned. It is also proposed that annual pre-financing for subsequent years be paid as part of the additional resources allocated to the programmes.
Moreover, the European cofinancing rate continues to be set at a maximum of 100%. Thus, the institution hopes that this rate of cofinancing (which is in fact more like funding) will contribute to the rapid deployment of this additional funding.
The package will pursue a primarily social objective and will seek to support investment to maintain employment, notably through short-time working programmes and support for the self-employed.
It will also contribute to job creation, particularly for young people, who have been particularly affected by the crisis, said Nicolas Schmit, Commissioner for Jobs and Social Rights.
Health care systems, the provision of working capital and investment for small and medium-sized enterprises will also be targeted by the aid, which will be available for all economic sectors. Particularly in the tourism and culture sectors, which have been particularly affected by the crisis, according to the European Commission’s analysis (see EUROPE 12494/4). Of course, priorities related to the EU’s climate and digital agendas will also receive earmarked funding.
It should be noted that Member States will be able to decide for themselves how the funds will be used. “Maximum flexibility” introduced by the Commission in the CRII+ instrument at the request of Member States will thus be maintained.
The Commission specifies that funding will be allocated among Member States taking into account, on the one hand, the “relative prosperity” of each Member State and, on the other hand, the socio-economic impact of the Sars-CoV-2 virus at national level.
Controlled flexibility. Asked about the fears of some NGOs that funding would be channelled towards the exploitation of fossil fuels, Mrs Ferreira replied that the Commission would check that there was no “complete subversion” of the principles of cohesion, but also of the principles of greening the economy. (Pascal Hansens and Damien Genicot)