The European Parliament this Wednesday gave the green light to the key piece of the community recovery package. The European Parliament has endorsed by a large majority (582 votes in favor, 40 against and 69 abstentions) the creation of the mechanism that will channel the bulk of the 750,000 million euros to carry out investments and structural reforms. Brussels now urges countries to ratify European legislation to set new own resources, which is essential to put the mechanism in place. So far, only six of the 27 EU partners have done so.
The European Parliament endorsed the large fund that will be deployed within the massive aid package that Brussels will deploy to face the pandemic. The resilience and recovery mechanism (RRF) will have 672,500 million euros, of which Spain will receive about 69,500 million in subsidies between 2021 and 2023. If the calendar is strictly adhered to and the Community Executive blesses the Spanish plan, community sources estimate that the first advances could arrive before summer, corresponding to 13% of the total. “The EU needs money to start flowing to the Member States to help their recovery and support businesses and citizens,” said Executive Vice President of the European Commission Valdis Dombrovskis.
However, for the fund to start up it is necessary for all countries to ratify Community legislation on the new own resources that will be used to pay interest on the debt. For now, Croatia, Cyprus, Slovenia, Portugal, France and Bulgaria have done so. The Commission hopes that the rest will be able to do so this month. At the same time that this is happening, it continues to negotiate with the countries the plans, which must be officially presented before April 30. So far, 18 countries – including Spain – have submitted their drafts; six have sent some elements of their programs, and three have been discussing them, but without sending any documents, according to community sources.
The speaker on the regulation of the fund by the group of Socialists and Democrats, Eider Gardiazábal, highlighted “the success” of the EU in “facing the economic crisis derived from the pandemic with an investment plan of almost 700,000 million euros.” “This is a different solution than the one in 2008, when ‘austerity’ and ‘cuts’ were the big headlines,” he added.
The regulation establishes that 37% of investments must be linked to the green economy, while 20% must be used to face the challenge of digitization. Community sources assured that most of the plans meet both requirements, although in some states “some efforts are still necessary.” The bulk of the work, however, is concentrated on defining objectives and milestones. The Community Executive wants to establish a clear calendar in which each country must have advanced in investments and reforms and will have to have achieved certain objectives.
This roadmap is key, since the disbursements that are made periodically will depend on it. The same sources explain that the Commission prefers to press now to have clear commitments and avoid future litigation with the States. The community executive also wants to tie structural reforms to guarantee the sustainability of public finances, the labor market or tax. On the contrary, states are putting more emphasis on investment. “It is logical that it is easier to ask for money for investments than to apply reform, but we are rebalancing it,” add other sources.
The Commission will also note the elements that are part of the plans (A, B or C). Countries must achieve seven maximum scores out of 11, among which there will be some mandatory. One of them is the quality of the control and transparency mechanisms of community funds. Brussels wants maximum credibility and guarantees against hawks, who reluctantly accepted a mechanism involving large-scale indebtedness and a system of transfers to the worst-hit countries in Europe, which again are those of the south.