The Recovery Instrument will turn 🇪🇺 economic governance upside down. That is good, but it will come with massive challenges to the institutional architecture: Essentially, we need to politicize overnight a system that so far has been the very definition of technocracy.
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Thread:
1/ Ever since its inception, the European Semester has essentially remained a niche techno exercise. Countries received recommendations to do measures they either ignored or they had planned to implement in any case. Politically, it had very little traction.
2/ What the Semester did do was produce massive amounts of data and a discussion process at technical level where civil servants exchange very politely what they think about each other's economic policy (though mostly there is no discussion at all). There is value in that.
3/ This all worked out so far because there is no money involved. Country-specific recommendations (CSRs) are in the end just that: recommendations that member states are free to ignore. This will change right here right now with the Recovery Instrument.
4/Under the RI's main tool, the Recovery and Resilience Facility (RRF) will fund reforms and investments in member states. Unlike under the Reform Delivery Tool proposed by the Commission in 2018, these will not be symbolic sums. We are talking billions and several points of GDP.
5/ This means all of a sudden there is traction in what Brussels thinks member states should do. But of course this does not mean that we can take this year's CSRs and think that next year, these reforms will all of a sudden be implemented because money will be attached to it.
6/ To the contrary: EU economic governance will become a completely different ballgame. So far, National Reform Programmes sent to Brussels had no distributional consequences. Recovery and Resilience Plans (RRPs) will have *massive* distributional impact within member states.
7/How to distribute additional EU funds will be subject to fierce internal debates in member states. And the RRP will as a result not reflect technocratic dreams but a domestic political compromise - as it should, because economic policy making is quintessentially political.
8/ But that also means that the economic governance tools and processes we have are totally ill-equipped for this. The Commission assessment of the RRPs cannot be a technical exercise because RRPs will not be technical documents. It will instead have to be a political judgment.
9/ This btw also means that the CSRs will reflect the outcome of the negotiations between the Commission and the member states in terms of the final RRP that will be submitted by the member states and approved by the Commission. CSRs will not guide, but follow the RRPs.
10/ Therefore, the process needs a heavy dose of formal politicization at both EU and national level. This is why we propose here with @onethuthree a veto for the EP on individual RRPs and an obligation for national parliaments to debate and vote on RRPs.
delorscentre.eu/en/publication…
delorscentre.eu/en/publication…
11/ Does that mean that we will not need country reports and economic assessment by Commission country desks anymore? Of course not. Political judgment needs a solid empirical basis. But a governance that pretty much relies on the fiction of analytical objectivity won't cut it.
12/ To sum up: With the RRF, the niche techno days of EU economic governance will factually be over. The question is whether the institutional setup can adapt fast enough. Something to follow closely in the weeks to come.
