Recovery plan: the European cavalry in order of battle

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Accused of slowness, the EU will take an important step next week to unlock the billions of euros promised in the face of the pandemic: a dozen countries must submit their recovery plan to Brussels with the hope of payments as early as July.

German justice lifted a big obstacle on Wednesday by rejecting an appeal that threatened the ratification of the project by Berlin. Then on Thursday, Portugal was the first country to file its case. “It has been a very good week,” said a senior European official.

Next week, “a dozen” other national recovery plans, documents of 50,000 pages on average, must be presented, said this source, including that of France on Wednesday.

This step allows the Commission to start the formal examination of each country’s investment and reform projects, which should last two months, before a green light from the European Council representing the Member States, which will take up to four additional weeks. .

“Our goal remains to adopt all the plans by the summer,” Commission President Ursula von der Leyen said on Thursday. If all goes well, “we will see the money flow in July”, with the payment of pre-financing representing 13% of total aid, we assure the Commission. One year after the historic agreement of the Twenty-Seven.

A historic project

On an unprecedented scale, with 672 billion euros in grants and loans, the mechanism financed for the first time by a common recourse to borrowing, embodies European solidarity in the face of the Covid-19 crisis.

But Europe suffers from the comparison with the United States where more massive aid was released faster, while a faster vaccination campaign has allowed the American economy to take a lead.

Hence the criticisms.

“I see that the American cavalry is arriving on time, that the money is there, it is in the United States. I would like the European cavalry to arrive on time as well, ”the French Minister of the Economy, Bruno Le Maire, was annoyed at the beginning of April.

Thursday, the President of the European Central Bank, Christine Lagarde, again insisted on “the urgency” to implement the support plan.

Spain and Italy should be the main beneficiaries with nearly 70 billion euros each, ahead of France (nearly 40 billion).

In recent weeks, the Commission has had difficult discussions with member countries on national projects which must meet specific criteria. The filing of the first files shows that political blockages have been overcome.

On the investment side, at least 37% of investments must relate to the environment, in particular the fight against climate change, and 20% the digital transition.

The money will make it possible to finance the thermal renovation of buildings, railway projects, charging stations for electric vehicles, high-speed telecommunications networks or even data storage infrastructures …

The aim is to modernize the European economy, which suffers from underinvestment.

Structural reforms

But, to ensure the proper use of public funds, the Commission is also asking Member States to commit to structural reforms, with a detailed two-year schedule, compliance with which will condition the payment of aid.

Potentially concerned are the ongoing reform of unemployment insurance in France, a reform of the labor market in Spain, cuts in public spending in Italy … “Specific recommendations” formulated in 2019 and 2020 by the European Council.

Negotiations with member states are still ongoing. They seem particularly difficult with Hungary, whose Prime Minister Viktor Orban came to meet Ursula von der Leyen in Brussels on Friday.

Budapest threatened last year to block the European recovery plan, trying in vain to prevent respect for the rule of law, for which it is criticized, from determining the payment of aid.

The rule of law or corruption issues are “very central elements” of the reforms required, said a European official on Friday.

Mr Orban badly needs the 7 billion in subsidies allocated to Hungary. But he has a trump card up his sleeve. His country is one of the nine member states that have not yet ratified the European recovery plan. However, no payment will be possible without the green light from everyone.