Much of the additional EU expenditure under the 🇪🇺 Recovery Instrument - about 310 bn in 2018 prices - will be spent through the Recovery and Resilience Facility (RRF). Details matter here - and will be heatedly debated in the weeks to come.
An overview thread:
An overview thread:
1/ The RRF is a typical EU instrument. It tries to strike the appropriate balance between effect and control: The aim is to ensure that the money is spent where it is needed as fast as possible while building in enough safeguards to avoid misuse that would undermine the aim.
2/ Therefore, the EU does not just reroute funds to national budgets. Instead, the RRF proposal contains two control mechanisms: First, member states and @EU_Commission have to agree on investments and reforms to be funded. Second, the money only flows after (some) delivery.
3/ So first, member states have to submit to the Commission a "Recovery and Resilience Plan" which has to contain a package of reforms and investment that conforms to a number of criteria. Recommendations under the Semester are one factor, but not the only one (see list below).
4/ The proposal gives member states relatively wide discretion what measures to put in the RRP as long as the overall plan is in line with the criteria. Member states also have to estimate the costs for investments (fairly obvious) and reforms (much trickier).
5/ The Commission then does an assessment of the plan - depending on how good it is, it can award the full amount of the member state's share in the RRF (provided that the plan's cost amount to the full the share) or only parts of it.
6/ But the money will only paid out *after* the countries will have completed agreed milestones. Again, this is a Commission assessment and decision.
This is why the Commission expects a lot of *commitments* to happen in 2021/2022, but not a lot of *payments* (see table).
This is why the Commission expects a lot of *commitments* to happen in 2021/2022, but not a lot of *payments* (see table).
7/ The text describes these decisions as Commission decisions - but as regards the assessment of the RRP, it really is an Implementing Act: Member states can stop it with qualified majority.
Some MS will want more then that: They will want full control.
Some MS will want more then that: They will want full control.
8/ They will argue that the Commission will be too lenient on the main beneficiaries and therefore the Council should take the decisions. This would take us back into euro crisis territory where then finance ministers have to judge the economic plans of their peers.
9/ Besides the political problems this has created, it is also not clear that it works: Peer pressure has been low in the Council and as all member states will receive funds from the RRF, it is unlikely that in practice a stronger role for the Council would lead to more control.
10/ Conversely, the Commission stands a lot to loose from this whole exercise - if the money is not used sensibly, it is unlikely it will be again entrusted with this kind of sums. Hence, one could argue that the Commission is much better placed to handle it than member states.
11/ Beyond the governance, there will also be a fight on the criteria and broader Rule of Law and macro conditionality - and the weaker an institution's role in the governance, the more it will push for binding criteria (👋 @europarl_EN).
12/ The choices on these two dimensions, governance and criteria, will strongly impact whether or not countries will be able to rapidly tap the funds in a sensible manner. If things go wrong, we could also end up with a massively convoluted procedure.
13/ And of course, in the end leaders will also have to decide the split between grants and loans. But the nitty-gritty infight will now concentrate on these two dimensions. And given that we talk about 310 billion, it's worth paying attention.
