In the exclusive conversation with H.E. Johannes Hann, European Commissioner for Budget and Administration, the details of the next European MFF Budget and a new Recovery and Resilience Facility (called also Next Generation EU) have been discussed. From the timeline, up to the approval and ratification, to its outcomes and possible uncertainties.
“The reaction of the European Union to this health emergency has demonstrated as a historical evolution compared to the response provided to the previous crisis” - H.E. Johannes Hann
- The EU reaction to the impact of the COVID-19 pandemic on the European economy was very quick compared to the previous economic crisis: in just a couple of months, the European Union was able to decide on a historic package. Yet, it has to be mentioned as well that the process had its stalling moments and the need for the ECB PEPP intervention along with discretionary fiscal measures. In March, the European Commission took more than 500 decisions the majority of which were state-led arrangements to support Member States in sustaining their financial expenditures for the crisis, especially through the SURE program. This support will continue through the European Consilium initiative called REACT-EU program.
- The citizens’ perception of the EU response to the crisis, will much depend on the communication strategies driven by media and national politicians.
- The acknowledgement factor was the crucial one in ensuring a quick response by policymakers. Indeed, it was possible thanks to the consciousness of European leaders of the urgency of the situation.
- Regarding the next steps: at the moment the European Council is working on elaborating a final package to start technical negotiations with the European Parliament in the second half of August. In October, there will be two plenary sessions of the European Parliament, during which – hopefully – a final agreement will be reached. From that moment on, the national ratification process will depend much on the political will and political logistics. Later on, the Member States will have up to 18 months to present the “National Recovery and Resilience Plans”.
“We want to have a quick ratification process. It is extremely ambitious, but we cannot wait” - H.E. Johannes Hann
“There are some uncertainties regarding the ratification process – related especially to the positions of some strong countries like the Netherlands – but we hope for a general understanding of the urgency” - H.E. Johannes Hann
- H.E. Johannes Hann sustained the need to acknowledge that all Member States, regardless of their size and prosperity, benefit from the European single market, which can continue to function appropriately only if every part of it has the capacity to perform well.
- Another crucial element is the “rule of law” conditionality, as a decisive criterion for budget spending and distribution of EU funds. It is part of the current debate at the European Parliament and it could represent a potential problem at the ratification moment of the next legislative package for the 2021-2027 MFF. This is due to different views among European Members, with some countries aiming at tougher controls on the respect of this condition and others wishing for softer supervision on this issue.
- Moreover, the question of the control mechanism over the spending on a national level and Recovery fund governance will probably have to be further discussed during negotiations. Despite the demand of Dutch Prime Minister Mark Rutte for each country to have a veto power in case a Member State is not meeting its target, it should remain a prerogative of the Commission to grant it a monitor on the implementation.
- Furthermore, concern remains on how the borrowed recovery funds will be repaid – especially since the second biggest European contributor has left, which means it will be reflected in an increase for all other Member States’ contributions. New measures are being discussed, such as the possibility of having “own resources” of EU revenue.
- Notwithstanding the historic deal, the European Commission has expressed its concern in the cuts in the funding of some crucial areas – such as Research and Innovation, Neighborhood and Foreign policy. Despite these concerns, the overall result is a positive one, focused on the structural overhaul of the economies of the European Union Member States.
“The huge recovery and resilience programs are future-oriented: to bounce back economies and make societies stronger” - H.E. Johannes Hann
- The key goal of the next EU budget and Next Generation EU is to recover European economies and societies, through the achievement of necessary milestones set by the European Union and National Reforms Programmes – such as digitalization and green policies. It is the first time in European history that the budget will be linked to climate objectives.
- The purpose of increased investments is to better prepare and equip European countries for the potential next crisis, to make them stronger and more resilient.
- Moreover, the post-COVID-19 scenario will be a more dynamic one, with an augmented global competition. For this reason, it is necessary for the European Union to remain a key player and a first-mover actor. There is still a margin for changes and ameliorations but is fundamental for the European Union to be economically and politically united in order to make the next step towards a more resilient union.
This online event is held by GLOBSEC in a framework of GLOBSEC’s series of actions under the campaign #Hub4Europe in cooperation with the Institute for the Danube Region and Central Europe (IDM).