October 24, 2020

Germany tries to give a twist to the macroeconomic conditionality of the European recovery fund

Spain is not completely convinced by the text, but with each passing day the recovery fund is more urgent. The Director General of the Treasury, Carlos San Basilio, who has intervened in the meeting of EU Finance Ministers because the Economic Vice-President was in the Council of Ministers has avoided expressly endorsing the fund regulations drafted by the German presidency of the EU, and presented objections in line with what was expressed by other southern countries: “We have suggestions to improve the text [en la reunión de embajadores ante la UE de este viernes]. For example, in line with the rapid implementation of the plan, we can do one more effort to cut deadlines. In relation to the release of the financing amounts, in order not to regret in the future that the procedure that we have approved here is too cumbersome, the reduction of the deadlines is essential “.

The difficulties of the European anti-crisis fund: absorption capacity, conditionality and no gender perspective

The difficulties of the European anti-crisis fund: absorption capacity, conditionality and no gender perspective

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And he added: “And we also have a specific reference to the fiscal and macroeconomic recommendations. What is said here is somewhat redundant, and it can also cause confusion. We hope that the agreement will be reached as soon as possible.” In other words, reducing the eight-week period available to the European Commission to evaluate national reform plans, with the aim of accelerating the disbursement of aid, something that the European Commission itself has defended, although its economic vice-president , Valdis Dombrovskis, has assured that they will try not to exhaust that period.

“The position of the Government is to reach an agreement soon, which ensures that the instrument is operational as soon as possible,” say Executive sources. The Prime Minister himself has urged to accelerate negotiations with the European Parliament at the last European summit, last Thursday and Friday in Brussels.

Indeed, Germany has given a twist to the conditionalities approved by the EU leaders last July in the regulation of the Recovery and Resilience Instrument (RRF), the main component of the anti-crisis fund that will distribute 672.5 billion euros to the capital between loans and grants –140,000 million of them will go to Spain–. In what sense?

Like the European Commission, in the German text, to which elDiario.es has had access and which has obtained the majority approval of the EU finance ministers and that this Friday the ambassadors of the 27 will again discuss before the Before going to negotiations with the European Parliament, the EU foresees macroeconomic sanctions, something that was in the text of the European Commission: the so-called article 9. The rapporteur of the socialist group in the European Parliament, Eider Gardiazabal, told elDiario. is that they have “presented an amendment like S&D to annul the possibility of macroeconomic sanctions through Article 9. It is not logical that we are going to suspend payments on top of that. It is doubly irresponsible.”

Article 9 of the Regulation it is the one that enables to suspend the disbursement of funds if the fiscal framework is not respected “; Urtasun said:” At this moment, this article is a bit inapplicable because the Stability and Growth Pact is suspended. There is no certainty about when it will be reapplied and everyone has different ideas. As there is that uncertainty, that macro conditionality that the article is establishing, we want to eliminate it and we have made an amendment to the elimination of that article 9, like other groups “.

According to the proposal approved by Ecofin, “in the event of significant non-compliance” of the debt and deficit frameworks, which will be suspended throughout 2021, “the Council, on a proposal from the Commission, may suspend the payments of the recovery mechanism and resilience “.

However, the European Commission activated the escape clause of the Stability and Growth Pact to give a free bar to spending, the deficit and the debt of the States, which will reach record figures at the end of 2020. And this Monday it confirmed in the Eurogroup , the meeting of finance ministers of the euro zone, qthat the clause will remain active throughout 2021. But, what will happen later when it is asked to reactivate the pact and return to a deficit rate of 3% when there are countries, like Spain, at 10%? “There is no certainty about when it will be reapplied and everyone has different ideas,” explains Urtasun.

The regulation approved this Tuesday also establishes that in the recovery plans of the Member States, “an explanation of the coherence of the proposed recovery and resilience plan with the specific challenges and priorities of each country identified in the context of the European Semester,” including its fiscal aspects and, when pertinent, those identified in the context of the macroeconomic imbalances procedure “.

Indeed, coherence with “fiscal aspects” and “macroenomic imbalances” is made explicit at various times in a way that was not in the European Commission proposal: “It is expected that the recovery and resilience plan will contribute to effectively addressing the challenges identified in the country-specific recommendations, including fiscal aspects and the recommendations officially adopted by the Commission in the European Semester. ”

In this sense, the Greens ask in an amendment “that country recommendations can be taken into account, but only those reforms that have to do with the specific objectives of the regulation: pensions are not part of the fund’s investment objectives. recovery, they have nothing to do with the objective of the regulation. ”

However, the macroeconomic imbalance procedure (MIP) can be a double-edged sword that southern countries can use against northern ones. And it is that in the last round, the European Commission identified “them with imbalances of the previous round”: Bulgaria, Croatia, Cyprus, France, Germany, Ireland, Italy, Netherlands, Portugal, Slovenia, Spain and Sweden. “The IPM is basically telling the Germans to stop running monstrous trade surpluses,” explain parliamentary sources.

On the other hand, the so-called frugal – the Netherlands, Denmark, Sweden, Austria – and Finland have called for a “more explicit” reference to the economic recommendations of each country as an indicator to unblock aid.

As for another of the controversial aspects, which seems excessive to Hungary and its members and short to the Netherlands and its allies: compliance with the rule of law linked to funds. Thus, the text approved this Tuesday by Ecofin provides for the “suspension and termination” of the funds “in the event of serious irregularities, that is, fraud, corruption and conflict of interest in relation to the measures supported by the recovery fund.”


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