The regulation to suspend payments in the event of a breach of the Rule of law in a Member State would apply to any EU budget, including, in the worst-case scenario, in the case of the so-called provisional twelfths regime, EU sources said on Wednesday (2 December).
The deadlock on the Multiannual Financial Framework (MFF) and the Recovery Plan, due to the criticism of Poland and Hungary on the Rule of law conditionality mechanism, is pushing the European Commission to prepare for the eventuality of not having a 2021 budget at the beginning of next year or even a 2021-2027 MFF (see EUROPE 12613/6).
In such a scenario, the provisional twelfths regime would apply, which would have the effect of rolling over amounts from 2020, but without the possibility of financing the new programmes or the EU Recovery Plan.
“If, at the beginning of a financial year, the budget has not yet been definitively adopted, a sum equivalent to not more than one twelfth of the budget appropriations for the preceding financial year may be spent each month in respect of any chapter of the budget in accordance with the provisions of the Regulations made pursuant to Article 322; that sum shall not, however, exceed one twelfth of the appropriations provided for in the same chapter of the draft budget”, explains the Treaty on the Functioning of the EU (Article 315).
A reduction of 50 to 75% for cohesion. Without a new own resources decision, payments in the 2021 budget would have to be reduced by some €25-30 billion, sources said.
As a result, payments to beneficiaries to honour commitments would be delayed, especially those under cohesion policy. Reductions for this policy are estimated at between 50 and 75%. The new commitments would be available for a very limited number of programmes.
A non-existent Recovery Plan. The EU Recovery Plan, based on the new own resources decision, could not exist in this scenario of provisional twelfths, as the Commission would not be able to borrow the money on the markets.
2021 budget. The deadline for an agreement between the European Parliament and the EU Council on the 2021 budget is 7 December. A trilogue on the 2021 budget will take place on Thursday 3 December, ahead of an European Parliament/EU Council conciliation meeting on this budget the following day, Friday 4 December. The Committee of Permanent Representatives of the EU Member States (Coreper) was due to discuss, late in the afternoon of Wednesday, 2 December, how to proceed with the conciliation on the 2021 budget.
One idea put forward would be to reach an interim agreement on 4 December, to be signed once the obstacles to the adoption of the 2021-2027 MFF have been removed.
If there is an agreement at the European Council on 10-11 December, the Commission could then adopt a second draft budget for 2021, which would be voted by Parliament at the plenary on 14-17 December, together with the MFF and the Recovery Plan.
New programmes. The Commission has proposed a long series of new programmes, which are being negotiated, agreed or are in the process of being adopted. They should therefore enter into force at the beginning of 2021 and have a legal basis. However, in the event of a provisional twelfths regime, “these new programmes will not be able to be financed”, including in particular Horizon Europe (research). A 2021 budget (based on the new 2021-2027 MFF or the ceilings and structure of the current 2014-2020 MFF) that incorporates these programmes is needed in order to start financing them.
Other solutions envisaged to circumvent the Hungarian and Polish veto and to endorse the Recovery Plan (‘national guarantees’ or enhanced cooperation) seem difficult to implement, according to a European source. (Original version in French by Lionel Changeur)