German Finance Minister Olaf Scholz said on Tuesday 6 October that Member States had taken “a big step” towards a political agreement on the proposed regulation establishing the Recovery and Resilience Facility, the budgetary instrument at the heart of the European Recovery Plan (see EUROPE 12562/12).
Meeting by videoconference, the Ecofin Council could not formally adopt its position for the forthcoming negotiations with the European Parliament. This could be done on Friday 9 October at the level of Member States’ ambassadors to the EU (Coreper). According to Mr Scholz, a qualified majority of Member States exists on the seventh German compromise proposal submitted to national delegations, although some countries still want improvements to the text.
During the public ministerial discussion, the vast majority of Member States who spoke supported the main objectives of the legislative proposal detailing the staffing and operation of the Facility. The stated objective is to move as quickly as possible to ensure that EU financial aid reaches national economies as early as 2021 at the earliest.
Timelines. In particular, some countries such as Spain have asked for a shortening of the maximum period of 2 months for the European Commission to analyse and recommend the approval of the national recovery plans to be submitted to it by Member States. “We must not be delayed because of bureaucratic delays”, said France.
However, the Commission considers that this period is necessary to enable it to analyse these plans in depth. The Netherlands is following the same line.
Climate and digital transitions. The minimum thresholds for investment by each country in the climate and digital transitions through the Facility, set at 37% and 20% respectively, were also discussed.
Denmark, Ireland and Finland, which imposed a 50% threshold on itself, supported a higher target for climate transition investments.
On the other hand, Poland holds the opinion that these thresholds are already sufficiently ambitious.
On the measures that could be financed through the Facility, Luxembourg considered that the scope had been “a little too broad” for a budgetary instrument initially envisaged to respond to the health crisis linked to the Covid-19 pandemic.
Rule of law. The legislative proposal requires Member States to take all measures to protect the EU’s financial interests in order to detect cases of fraud and/or conflicts of interest. The Commission will rely to the maximum extent possible on national control and audit systems and will recover, if necessary, funds affected by such malpractice (see EUROPE 12559/16).
For Denmark, Sweden, Luxembourg and Belgium, these provisions linking aid from the EU budget and respect for the rule of law could be strengthened.
Another concern is that references to country-specific socio-economic policy recommendations could, according to some countries, make the Facility less flexible or even favour certain reforms or fiscal policies that are inappropriate in the face of the urgency of economic recovery.
“In a post-Covid-19 environment, not all socio-economic policy recommendations carry the same weight”, said Ireland, describing the idea of broadening the corporate tax base as “counterproductive”. Contrary to the wish of the German Council Presidency, it has requested that Coreper return to this item on Friday.
Other countries – Spain, Greece, Luxembourg and Poland – also questioned the references to fiscal policy recommendations.
On the contrary, the Netherlands has called for a stronger link between national recovery plans and country-specific recommendations, with Sweden even asking for an explicit reference to the Stability and Growth Pact.
Finally, Greece and Italy, which will be the first beneficiary of the Facility (€44.7 billion in grants + €20.7 billion in loans), welcomed the fact that the calculation of the pre-financing of the national plans in 2021 includes grants and loans.
See the 7th German compromise proposal: https://bit.ly/2GGIaRE (Original version in French by Mathieu Bion)