Refusing to be faced with a fait accompli, the European Parliament intends to assert its prerogatives in the budgetary arena. It warned on Wednesday 22 July that it wants to improve some important elements of the agreement reached by EU leaders the day before on the post-Covid-19 European Recovery Plan and the EU’s Multiannual Financial Framework (MFF) for 2021-2027 (see EUROPE 12532/1).
In its sights: the budget cuts made by the European Council to priority programmes (Horizon Europe, InvestEU, etc.) funded in the post-2020 MFF, own resources, and the governance of the European Recovery Plan, as well as the link between the EU budget and respect for the Rule of law.
Parliament President David Sassoli described the political groups’ position to the press after the chairs met earlier in the morning. Along with the European Commission, “we agree that we must revisit the governance of the Recovery Plan, the own resources for the EU budget, and the MFF”, he said, as he provided an update on Tuesday on discussions with its President, Ursula von der Leyen.
On Thursday 23 July, Parliament will adopt a resolution prepared by the pro-European political groups (EPP, S&D, Renew Europe, Greens/EFA, and GUE/NGL) in an extraordinary plenary session in order to react swiftly to the EU-27 agreement.
The MFF rules require the consent of Parliament, as the budgetary authority, by an absolute majority of its members. The vote will take place in the autumn, once negotiations with the EU Council have been completed. On the own resources decision, Parliament will only deliver an opinion. But it is co-legislator with the EU Council on the sectoral texts establishing Community programmes, except for the Next Generation EU Recovery Plan, which is the sole responsibility of the EU Council.
MFF beyond the European Recovery Plan. “With regard to the MFF, there is still a long way to go”: we want to focus on “the budget cuts that are unjustifiable”, said Mr Sassoli, who spoke out against cuts to research, youth, Erasmus+ and asylum and migration. “We need to open negotiations to achieve an MFF that is more relevant to the lives of citizens”, summarised the President of Parliament.
Parliament’s draft resolution describes cuts in public health and research programmes as “dangerous [...] in the context of a global pandemic”. Cuts to innovation, education, and the digital and climate transitions “jeopardise the EU’s position in an increasingly uncertain and volatile world”.
Among the Commission, the disappointment is palpable as well. As soon as the agreement was announced on Tuesday morning, Mrs von der Leyen mentioned this “difficult point”. “In their search for a compromise, leaders have made far-reaching adjustments to the new MFF and Next Generation EU, for example in the areas of health, migration, external action and InvestEU. They have not taken up the Solvency Support Instrument. This is regrettable. It decreases the innovative part of the budget, even if more than 50% of the overall budget will support modern policies”, she said.
“We would all have preferred a more ambitious MFF”, a European official said on Wednesday morning. The agreement on the 2021-2027 MFF results in a reduction of €10 billion compared to the current MFF, but with 27 Members, i.e. without the UK contribution, which would have been €70 billion over 7 years, he nevertheless qualified.
Own resources. David Sassoli noted with satisfaction the willingness to introduce a new own resource and the necessary increase in the own resources ceiling in order to authorise the Commission to borrow on behalf of the EU-27.
“This is a useful and interesting step forward, in line with Parliament’s orientations”, said its President.
The European Parliament is calling for a precise timetable and the creation of two own resources by 2021, whereas the European Council agreement provides for only one, namely the creation of a European tax on non-recycled plastic packaging.
Thus, the political groups’ draft resolution mentions, in addition to the 'plastic' tax, a choice to be made among these options: - the Emissions Trading Scheme (and the revenues it generates with a eye toward its extension to shipping and aviation); - a carbon adjustment mechanism at the EU’s borders; - a digital tax; - a financial transaction tax; - the Common Consolidated Corporate Tax Base (CCCTB).
Within the European Council, there is awareness that discussions on own resources will be difficult.
Budget rebates. Parliament will also recall that it wants to see an end to all budget rebates, which it considers unnecessary after Brexit. It will deplore the fact that the European Council wishes to maintain them for the countries concerned (Germany, the Netherlands, Austria, Sweden and Denmark), and even to increase them.
European Recovery Plan. The European Parliament is reasonably satisfied with the €750 billion size of the Next Generation EU Recovery Plan, which includes €390 billion in subsidies.
But it is “necessary for Parliament to be involved in the governance of the recovery fund” through the adoption of “delegated acts”, Mr Sassoli stressed.
Parliament wants to be able, together with the EU Council, to set the European thematic guidelines for the Recovery and Resilience Facility, the budgetary instrument at the heart of the Recovery Plan, so that it can guide Member States in the preparation of their national recovery plans.
However, MEPs “have no intention of going into the details of national plans”, Sassoli said.
These national plans will be analysed by the European Commission in light of the socio-economic policy recommendations it makes to each country each year. They will be endorsed by the EU Council by a qualified majority of Member States. If a State considers that their implementation does not respect the agreed trajectory, it may request that the issue be raised at the level of the European Council.
According to the Commission, this procedure allows for a ‘stop-the-clock’, but does not grant a veto to one Member State over another Member State’s recovery plan. After 3 months, the Community method will resume its course, and only the Commission will be able to decide on the implementation of a national plan.
In their draft resolution, the political groups oppose the governance for the Facility selected by the European Council. In their view, by moving away from the Community method, this governance will only complicate the operation of the European Recovery Plan.
Protection of the EU’s financial interests. Another thorny issue is the link between the EU budget and respect for the Rule of law in order to protect the EU’s financial interests.
On this point, Parliament will express its “deep disappointment” at the European Council’s weakening of efforts in this area.
Parliament has been fighting since 2018 for the establishment of such a link. A May 2018 proposal for a regulation from the ‘Juncker’ Commission, which was taken up by the ‘von der Leyen’ Commission at the end of May, suggests that in the event of shortcomings in the Rule of law, a decision to suspend funds to the offending State should be adopted, unless a qualified majority of countries oppose this (reverse qualified majority).
Along these lines, MEPs will ask that work continue on the basis of the proposal on the table.
Expressed in vague terms to satisfy Poland and Hungary, the European Council’s agreement seems to reduce the urgency of establishing an appropriate mechanism. The EU-27 say they want the Commission to present a proposal to be adopted by a qualified majority of Member States.
Parliament believes that the mechanism being developed should not affect “the obligation of government entities or Member States to make payments to final beneficiaries or recipients”. Parliament does not want the citizens of the countries concerned to be penalised if EU funds are suspended.
According to Mr Sassoli, it is necessary to “specify the instruments”, because “in the conclusions, there are indications, but no lines of action”. He added that we must “find intervention measures to support, or rather to not support, a decrease in the level of ambition concerning our common values”.
Within Parliament’s political groups, some elected representatives welcomed the European Council’s conclusions. Fabienne Keller (Renew Europe, France), interviewed by EUROPE, considered “very positive” the fact that the EU-27 have agreed to the use of a “qualified majority” of Member States, and not unanimity, for decisions in the EU Council. We would have “liked something more detailed”, with a “more precise reference to criteria” to highlight the widespread failures in the Rule of law, she also acknowledged.
The Renew Europe group advocates a system of funds management by the Commission in the event of problems related to the Rule of law in a Member State so that beneficiaries continue to be supported.
For its part, the Commission continues to analyse the very meaning of the European Council conclusions. For example, does the qualified majority of Member States in the EU Council relate to the adoption of a cross-compliance regime establishing a link between the EU budget and the Rule of law, or to specific decisions to suspend the granting of EU funds in the event of infringements of fundamental European values?
According to the European Commissioner for Justice, Didier Reynders, there is no doubt that the agreement represents “a positive development” because “the reference to the Rule of law in the text is clear and understandable". According to him, the measures proposed by the Commission in the event of non-compliance “will be adopted by the EU Council acting by qualified majority”. He stressed that the Commission is examining the various options - a new proposal or an amendment of the proposal on the table - to enable legislative work to resume.
Finally, the Commission also asserts that the EU-27 is asking the Commission to propose measures to prevent fraud and irregularities related to the MFF, including measures to collect and compare data on the actual beneficiaries of EU funds.
Climate conditionality. Finally, on climate change, Parliament’s draft resolution calls on the Commission to regularly assess the consistency of Member States’ recovery plans with their national energy and climate plans (NECPs) and national plans for a just transition, as initially proposed.
In addition, according to MEPs, 10% of spending under the Recovery Plan and the MFF should be related to biodiversity, in addition to the 30% dedicated to climate. The need to phase out fossil fuel subsidies was also emphasised, with particular reference to the regulation on financial taxonomy.
See the draft resolution: https://bit.ly/2BpvX1y (Original version in French by Lionel Changeur, Mathieu Bion, with Solenn Paulic, Sophie Petitjean and Damien Genicot)