The @EU_Commission just published docs that again show why the Recovery Instrument will end the European Semester as we know it. Instead, the Recovery and Resilience Plans will become the central steering document and will politicise everything.

Thread:
ec.europa.eu/commission/pre…
1/ The Comission will not issue any country-specific recommendations next year for countries that will submit RRPs (that will be all). Also no country reports. Instead, there will just be an analysis of the RRPs that will be the background for the decision to grant RRF money.
2/ This makes sense as it would be weird for the Commission to greenlight a package of reforms and investments in a country's RRP and at the same time ask for different measures in the CSRs. There could be recs under the MIP, but also here I would expect coherence with the RRPs.
3/ This makes the RRP the absolutely central document of economic policy coordination at least until 2023, when the last 30% of RRF funds will be committed. Against this backdrop, it also makes sense that the Commission publishes today "guidance" to member states on the RRPs.
4/ This is unusual as the criteria for granting funds under the RRF is still up for debate between the EP and the Council. That the Commission nevertheless already wants to push member states into certain directions has two reasons: First, there is of course very little time.
5/ But second and more importantly, this is an attempt by the Commission to get ahead of the curve again: Member states have practically already started to spend the money. Both 🇩🇪 and 🇫🇷 have already publically stated that they will fund their recovery packages with it.
6/ Thus this is a delicate two-level game: On the one hand, legislators have not settled on anything, while on the ground, facts are created. If the big member states get away with it, everyone will. That's why today's move by the Commission is a good first step.
7/ The Semester as we know it is practically dead (that is a good thing) and now something new is shaping up. In this new structure, the RRPs will guide everything - and what is put in the RRP will be fundamentally political decisions by member states.
8/ But if this is not to translate into giving blank cheques to member states, as argued before, this will require stronger political control at the EU level by the EP to give the Commission the necessary political backing against member states.
9/ Thus the governance of the RRF and the involvement of the EP still matter: Not only to guarantee that the money in the RRF is spend well, but also to ensure that the new economic governance structure created now will be less intergovernmental and more useful than the last one.

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More from @lucasguttenberg

24 Jul
There has been some confusion over the last days on how the #EUCO result will affect the allocation of the money in the Recovery Instrument.

Short thread on what we know and what we do not know - and why there will be a lot of uncertainty until 2022 no matter what:
1/ The summit has changed the allocation compared to the Commission proposal by making 30% contingent on future growth. This means we know the allocation of about 70% or 218.75 bn. It looks like this: Image
2/ The remaining 30% will be split in half: 15% will be distributed according to the GDP shortfall in 2020, another 15% according to the shortfall in 2020 and 2021. Now there is a bit of confusion on whether this means shortfall in absolute numbers or relative to 2019 GDP. Image
Read 9 tweets
23 Jul
Great piece as always by @ZsoltDarvas on how the #EUCO outcome could change the allocations in the RRF. He gets +14 bn for 🇩🇪, which seems very, very high. My calculations show +1.2 for 🇩🇪 bn.

So what happened here?
bruegel.org/2020/07/having…
1/ Zsolt interprets the #EUCO conclusions as to mean that in the RRF formula, the unemployment rate as a criterion is replaced by the fall in GDP in euros - this is literally what the conclusions say but also massively puts large countries at an advantage. Image
2/ In my calculations, I used the shortfall in percentage terms - otherwise small countries with large shortfalls would get less through this change in the formula just because they are small. And population size is already in the formula anyway. Then, changes are much smaller: Image
Read 4 tweets
22 Jul
So if we cut through the different spins on the Rule of Law mechanism, the result is sobering - and I really would have liked to believe the positive interpretations. But it again comes down to the point that #EUCO will settle the details of the mechanism by unanimity.

Thread:
1/ The conclusions contain two decisions: First, there will be *a* mechanism under which the Council can adopt measures on the basis of a Commission proposal by QMV. So far so good. But there is zero specification on the criteria and rules for this, nor e.g. on blockable amounts. Image
2/ This is where the second decision comes in: "The European Council will revert rapidly to the matter." As we know, "European Council" in Brusselese means "unanimity". And thus, all the details of the mechanism - and that is what matters - will have to be settled unanimously.
Read 6 tweets
21 Jul
The #EUCO deal is a mixed bag. The Recovery Instrument is nothing short of a historic step. But the MFF is mediocre and a missed chance. And the eternal rule has been confirmed: Unanimity is poison.

My take on last night's season finale:
1/ First things first: This weekend was an important milestone in the history of European integration. One should be careful with such hyperbolic statements, but here, it is justified. For the first time, the Union will be allowed to borrow in the markets to fund EU expenditure.
2/ And we are not talking symbolic amounts but triple-digit billion euros. When @COdendahl, @GrundSebastian and I proposed this in early April, we were told that this was legally impossible and politically outlandish. We tended to agree on the latter. Yet, here we are.
Read 15 tweets
20 Jul
Das 🇪🇺-Wiederaufbauinstrument schrumpft gefährlich. Der Gipfel erleidet einen Rückfall in graue Einstimmigkeitsvorzeiten. Und manche Länder haben den Ernst der Lage immer noch nicht verstanden.

Ein (langer) Thread zum #EUCO-Verhandlungsstand:
1/ Es gab die begründete Befürchtung vor diesem Gipfel, dass der Europäische Rat seinem Ruf als Verschlimmbesserer-in-chief alle Ehre machen würde. Es kam genau so. Der auf Kante genähte, aber letztlich sinnvolle Vorschlag der @EU_Commission vom Mai kommt voll unter die Räder.
2/ Das Wiederaufbauinstrument wird zusammengestaucht: Aus ursprünglich 500 Mrd Euro in zusätzlichen EU-Ausgaben sollen nun 390 Mrd werden. Das wird nicht ohne Folgen für den Kern des Instruments, die Recovery and Resilience Facility (RRF), bleiben, die bei 310 Mrd liegen sollte.
Read 14 tweets
15 Jun
Folge 538 der Reihe "So kann man nicht rechnen". Wird Deutschland ab nächstem Jahr sprunghaft höhere 🇪🇺-Beiträge zahlen? Nein. Wird Deutschland im Durchschnitt in der nächsten Periode 42% höhere Beiträge zahlen? Höchst unwahrscheinlich.

Thread:
welt.de/wirtschaft/plu…
1/ Erster Fehler hier: Der Vergleich von Durchschnittsbeiträgen zweier Siebenjahresperioden (2013-2020 und 2021-2027) ist weitgehend sinnfrei. Die Beiträge steigen über den gesamten Zeitraum 2013-2027 aufgrund von Wachstum und Inflation stetig an, so wie Steuereinnahmen auch.
2/ Deshalb ist der Durchschnitt 2021-2027 natürlich höher als 2013-2020 - selbst wenn der Anteil der Beiträge an Wirtschaftsleistung und Steueraufkommen konstant bleibt. Dieser angebliche 42%-Sprung sagte uns also, selbst wenn er stimmen würde, wenig über die Belastung.
Read 10 tweets

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