The agreement on the Recovery Plan and the MFF constitutes a “pivotal moment in the history of the EU”, said the President of the European Council, Charles Michel, on Thursday 23 July in Brussels, when he presented the results of the four-day and four-night extraordinary summit (see EUROPE 12533/1, EUROPE 12532/2) to the plenary of the European Parliament.
European Commission President Ursula von der Leyen, for her part, shared MEPs’ (see other news) disapproval of the cuts in the 2021-2027 Multiannual Financial Framework (MFF) and felt that the agreement on the Recovery Plan provided a “light at the end of the tunnel”.
In less than 2 months, an agreement was reached on a package worth more than €1,800 billion, if the Recovery Plan and the MFF are added together, he welcomed. “This is the first time in the history of Europe that we have agreed to borrow collectively to finance expenditure, that our European funds are linked to our climate objectives and that our funds are linked to respect for the rule of law”, said the President of the European Council.
The volume of the Recovery and Resilience Fund is €750 billion, of which €390 billion in grants and €360 billion in loans.
On the MFF, Mr Michel is aware of the criticism that is raining down on the European Parliament side (see other news). But he believes that “additional resources” have been made available for policies that matter, such as digital, research or Erasmus+.
The President also recalled the creation of a special ‘Brexit’ reserve, because, with or without an EU/UK agreement, “it will undoubtedly be necessary to support the countries and sectors most directly affected by the economic consequences of this Brexit”.
The rebates, “maintained for one country and increased for four others”, were part of the agreement, Mr Michel said.
Own resources can represent, according to the EU Council President, “a turning point in the way Europe sees its future”.
He explained that he had wished to start repaying the loan in 2026, i.e., during the next MFF, rather than in 2028 (as proposed by the Commission). Otherwise, it would be difficult to envisage the creation of new own resources at the next MFF. “It is a politically powerful means of encouraging decisions on own resources.” He welcomed the forthcoming discussions on border carbon tax, digital contribution, financial transaction tax, ETS and plastic tax.
The agreement enshrines this link, this conditionality, between the financial issue and the issue of governance and the rule of law, said Mr Michel. He wants this subject to remain “at the centre of the democratic debate”.
For Charles Michel, “Europe is present, solid, standing”.
One European source also noted, on Wednesday 22 July, that when France and Germany, who came up with the idea of the €500 billion recovery plan, “are not exactly on the same page, it is difficult to decide”.
Last February, when the European Council negotiations on the MFF failed, France and Germany did not have exactly the same position.
So-called ‘frugal’ countries, which have long opposed a massive stimulus package of subsidies, will continue to have “a proximity of opinions on different issues”, according to this source. But the situation where blocs of countries “oppose each other” should be avoided.
Commission President Ursula von der Leyen called the agreement on the Recovery Plan a “huge success”, even if there are “fewer subsidies than the Commission and Parliament have advocated”. But the shadow in the picture is a “very meagre” future MFF, amounting to €1,074 billion (compared to the €1,100 billion proposed by the Commission). It is “a hard pill to swallow. And I know that this Assembly feels the same way”, she acknowledged.
She promised that, as co-legislator, “this House will have a say in the design and operation” of the recovery instrument.
The agreement guarantees a 125% increase in the size of the Just Transition Fund (€17.5 billion). Ms von der Leyen described the new own resources as “the big winner at the summit”. The Commission will present a package of new own resources. “This will include a digital levy. We will also put forward our Carbon Border Adjustment Mechanism and an extension of the Emissions Trading System”, she detailed.
The European Council is committed to respecting the rule of law and protecting our financial interests, the President of the Commission noted. “We will look into our 2018 rule of law proposal.” This provides for a decision to suspend funds (reverse qualified majority). “We will work together with the co-legislators to ensure that our 2018 proposal is taken forward and where necessary, improved”, she promised. “Protecting our budget and the respect for the rule of law go hand in hand”.
Budget Commissioner Johannes Hahn stressed that, on the rule of law, each EU country gives a different interpretation of what has been decided, “but there is something in black and white”. It will be necessary to “translate this into our procedures and laws”, he warned.
On own resources, the Commission will make a proposal in the first half of 2021, examining in detail the planning of own resources and the needs in terms of repayment of the loan.
To consult the European Parliament Budget Committee’s provisional analysis of the European Council’s agreement: https://bit.ly/2WSasOu (Original version in French by Lionel Changeur)