Budget Commissioner Johannes Hahn said it is “possible to reconcile” the positions of the southern European countries with those of the frugal countries with regard to the governance of the Recovery and Resilience Facility, during a debate on Tuesday 7 July organised by the Bruegel think tank and the Financial Times.
At the end of May, the European Commission proposed a European recovery plan entitled Next Generation EU, whose flagship instrument, the Recovery and Resilience Facility, will provide aid in the form of grants (EUR 310 billion) and loans (EUR 250 billion) to Member States on the basis of their national recovery plans (see EUROPE 12494/2).
As part of the ‘European Semester’ budgetary process, these four-year plans (2021-2024) will be submitted to the Commission, which will examine them on the basis of seven criteria, including: - compliance with the socio-economic policy recommendations made to the Member State; - the contribution to the green and digital transitions; - the lasting effect of the identified measures; - the stimulation of growth, job creation and resilience. The first two criteria will have a higher weighting.
“The future instrument should help Member States to build more resilience in case there is another crisis. [...] To achieve this, we take the ‘European Semester’ as an orientation, a benchmark to identify where the needs are”, Hahn said.
While presenting the European institution’s summer economic forecasts (see EUROPE 12522/1), the Commissioner for Economy, Paolo Gentiloni, called on the Member States to present their national plans “as early as autumn”, so that implementation can begin in early 2021.
Once agreed informally between the Member State and the Commission, a national recovery plan would be submitted to the Member States for assessment under the comitology procedure, together with the decision to grant the related financial assistance. Each plan will include milestones that, when achieved, will allow new financial tranches to be released on the basis of quarterly assessments by the Commission.
“There could be advanced payments, but further payments will be done with respect to the different milestones”, Hahn confirmed.
Some countries, particularly from northern Europe, are calling for a greater role for the EU Council in approving national plans in order to give them more political weight. However, other countries, especially among the beneficiaries, fear a politicisation of the process, or even a return of the ‘troika’ of institutional creditors, along with increased administrative burdens.
Allocation criteria. Several Member States, in particular the Visegrád countries (see EUROPE 12505/5) and the Netherlands, also criticise the criteria for allocating the funds envisaged for the Recovery and Resilience Facility. They feel that the criteria, such as the unemployment rate over the last 5 years, do not take sufficient account of the economic impact of the Covid-19 pandemic.
The Commission stands by its proposal. Gentiloni and Hahn acknowledged that there is no perfect proposal, but both stressed the choice made in favour of “hard figures”.
Nevertheless, Mr Hahn did not rule out the possibility that the allocation criteria could change when hard figures on the economic impact of the pandemic become available. This is the idea adopted by the President of the European Council, Charles Michel, who will present a negotiating box for the 2021-2027 EU budget at the end of the week (see EUROPE 12519/1).
The main countries benefiting from the Facility will be those most affected by the pandemic: Italy and Spain in the lead, with Poland coming in third place, according to unofficial projections leaked to the press. However, according to the Commission’s summer forecasts, Poland is reportedly less affected than other Member States, since it is facing a recession in 2020 of -4.6% of GDP, compared to -11.2% for Italy and -10.9% for Spain (see separate news item). (Original version in French by Mathieu Bion)