European recovery and resilience: new levels of managing socio-economic integration

European integration is not only most important aspect of the Union’s development: it is also a very difficult and complicated process. The EU institutions have at stake legal, managerial and organizational means to “govern integration”; suffice it to say that there are already over 40 thousand various types of laws adopted during last seventy years. Novice spheres just add several laws to a complicated regulatory domain. 

The post-pandemic destruction and numerous global and European challenges have forced the EU institutions to elaborate a set of urgent measures towards national recovery. Besides, the long-term and EU-wide integration strategies required new efforts in creating in the member states political economies’ patterns resilient to possible risks and crises.
As to the “planning component” in the European integration, the Commission and the Council –by the end of June 2022 – have endorsed (the former) and assessed (the latter) almost all EU states national recovery/resilience plans.

EU legislation in a nutshell
The EU can pass laws only in those areas where its members have authorised it to do so, generally through the EU treaties: i.e. through exclusive and shared competences.
There are three main principles which determine the ways and areas in which the EU may act a) conferral – the EU has only the authority conferred upon it by the EU treaties, which have been ratified by all member states; b) proportionality – the EU action cannot exceed what is necessary to achieve the objectives of the treaties (it is often quite difficult to judge what is really “necessary”); and c) subsidiarity – in areas where either the EU or national governments can act, the EU may intervene only if it can act more effectively.
In certain areas, special competences enable the EU institutions to play a particular role or to go beyond what it is normally allowed under the treaties: e.g. in coordination of national socio-economic and employment policies, in definition and implementation of the Common Foreign and Security Policy, and in so-called “flexibility clause”, which under strict conditions enables the EU to take action outside its normal areas of responsibility.
Reference to: https://ec.europa.eu/info/about-european-commission/what-european-commission-does/law/areas-eu-action_en

The directory of EU laws contains 20 chapters; most numerous are the following: external relations 5223 acts, agriculture 3593 acts; environment, consumers and health protection 3245 acts, industrial policy and internal market 2126 acts, competition policy 1975 acts, issues of general, financial and institutional matters -1772 acts; and customs union and free movement of goods 1229 acts.
With less than a thousand acts are such “chapters” as: area of freedom, security and justice 993, transport policy 981, freedom of movement for workers and social policy 791, common foreign and security policy 758 acts, right of establishment and freedom to provide services 709, fisheries 694; economic and monetary policy and free movement of capital 654; science, information, education and culture 528 acts. Less than five hundred are in: energy 495; regional policy and coordination of structural instruments 450, and taxation 251 acts.
Even in the business sphere (i.e. law relating to undertakings) there are 117 acts; whereas in the so-called “People’s Europe” sphere – 89 acts. Generally, only in the legislative fund, there are over 45 thousand legal acts regulating European integration process: no doubt it is too complicated to navigate in the subject-matter of European legislation…
Source: https://eur-lex.europa.eu/browse/directories/legislation.html

Novice spheres
The recovery regulatory “instruments” were formulated in the EU-wide recovery and resilience “facility”, RRF published in the EU Official Journal on 18 February 2021+).
It was deemed as a temporary recovery instrument to allow the Commission to raise funds in order to assist the member states in reforming political economy’s pattern and investments in line with the EU’s priorities. The RRF is also addressing global and European challenges that have been identified in the Commission’s country-specific recommendations for the states under the economic and social policy coordination revealed in the European Semester framework.
The RRF has a solid background of financial support: about €724 billion is available for the member states; this amount is divided into loans (€385.8 billion) and grants (€338 billion) for the member states’ recovery and resilience measures.
+) Source: Regulation with amendments in https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=OJ:L:2021:057:TOC

It is quite notable to see some of the biggest RRF funds allocations in the member states: Italy- € 191.48 bln; Spain – € 69.51 bln; Poland- € 35.52 bln; Greece – € 30,5 bln, Romania – € 29.18; Germany – € 25.61 bln; Portugal – € 16.61bln; among the Baltic States: Estonia – € 0.97 bln, Latvia – € 1.83 bln and Lithuania – € 2.22 bln. *)
The RRF is also aimed at achieving vital EU-wide priorities, such as reaching continental target of climate neutrality by 2050 and setting the member states on a path of digital transition, creating jobs and accelerating socio-economic growth.
Thus, in their NRRPs, the member states have agreed to allocate almost 40% of their budgets and reforms to climate measures and more than 26% on the digital transition: this exceeds previously fixed targets of 37% for climate and 20% for digital spending.
*) https://ec.europa.eu/economy_finance/recovery-and-resilience-scoreboard/timeline.html#timelineTable

NRRPs process
Presently, 25 national recovery and resilience plans, HRRPs have been endorsed and approved by the EU legislative institutions. According to the EU-wide RRF Regulation (which was published in February 2021) there is a set of six policy areas of the European recovery and resilience program (so-called RRF); the member states have to follow the RRF recommendations in their NRRPs while planning reforms and investments.
= Green transition. Reflecting the European Green Deal (as EU’s sustainable growth strategy) and the importance to achieve climate neutrality by 2050, the RRF contributes to the mainstreaming of climate action and environmental sustainability. The national measures supported by the RRF should contribute to the green transition, including biodiversity, reforms and investments in green technologies and capacities (including in sustainable mobility), energy efficiency, renewable energy, climate change adaptation, circular economy and biodiversity.
Thus, each recovery and resilience plan in the states has to dedicate at least 37% of the total allocation to climate objectives and green transition.
More in: https://ec.europa.eu/economy_finance/recovery-and-resilience-scoreboard/green.html

Note. “Green deal” proposals (from 14 July 2021) enabled the necessary acceleration of greenhouse gas emission reductions in the next decade. They combine: application of emissions trading to new sectors and a tightening of the existing EU Emissions Trading System; increased use of renewable energy; greater energy efficiency; a faster roll-out of low emission transport modes and the infrastructure and fuels to support them; an alignment of taxation policies with the European Green Deal objectives; measures to prevent carbon leakage; and tools to preserve and grow the states’ natural carbon sinks.
On “green deal” in: https://ec.europa.eu/commission/presscorner/detail/en/IP_21_3541

= Reforms and investments in digital technologies, infrastructures and processes are essential for increasing the Union’s resilience and innovative potential. They are also instrumental in reducing the EU’s external dependencies by diversifying key supply chains. The RRF support in the states digital s reforms and investments aiming to promote the roll-out of very high capacity networks, the digitalisation of public services and government processes, the digitalisation of businesses, in particular SMEs, the development of basic and advanced digital skills as well as measures supporting digital-related R&D and the deployment of advanced technologies.
Beyond a general requirement to contribute to the digital transformation pillar, each EU state must dedicate at least 20% of its recovery and resilience plan’s budget some measures contributing to various aspects of digital transition, keeping in mind its two main thematic files: a) digital skills and education, and b) digital public services.
More in: https://ec.europa.eu/economy_finance/recovery-and-resilience-scoreboard/digital.html
= Smart, sustainable and inclusive growth, including economic cohesion, jobs, productivity, competitiveness, research, development and innovation, as well as a well-functioning internal market with strong SMEs.
More in: https://ec.europa.eu/economy_finance/recovery-and-resilience-scoreboard/smart.html
= The RRF’s key objective is to promote social and territorial cohesion among the EU states and mitigate post-pandemic’s negative social impact. These efforts should also contribute to combating poverty, tackling unemployment and enabling the states to recover and create resilient societies. The NRRPs reforms and investments (supported by the RRF funds) should contribute to improving social and territorial infrastructure and services (including social protection and welfare systems), as well as supporting employment, new skills leading to the creation of high-quality and stable jobs.
The share of RRF’s “social expenditure” in the so far 25 NRRPs is divided in the following way: with equally 33% for: a) health and long-term care, and b) education and child care; 20% for employment and skills, and 14% for the general aspects in social policies.
Source: https://ec.europa.eu/economy_finance/recovery-and-resilience-scoreboard/index.html
More in: https://ec.europa.eu/economy_finance/recovery-and-resilience-scoreboard/social.html

= Health, economic, social and institutional resilience, with the aim of increasing crisis preparedness and crisis response capacity. Post-pandemic period highlighted the importance of reforms and investments in health; showing an important aspect of investing in economic, social and institutional resilience to increase crisis preparedness and response capacity. The EU states have already included in their NRRPs measures to improve the resilience, accessibility and quality of health in the long-term, including measures to advance their digitalisation, and increasing the effectiveness of public administration and judicial systems.
More in: https://ec.europa.eu/economy_finance/recovery-and-resilience-scoreboard/health.html

= Policies for the next generation, children and the youth, such as education and skills. Reforms and investments for children and the youth are essential to mitigate the post-pandemic impact on the next generation of Europeans and to ensure that the generational gap is reduced. The RRF supports reforms and investments aimed at improving access to general, vocational, and higher education, as well as its quality and inclusiveness, focusing on digital education, early childhood education and care, and youth employment support.
More in: https://ec.europa.eu/economy_finance/recovery-and-resilience-scoreboard/policies.html

NextGenerationEU plan
The Commission underlined that this was more than a recovery plan: it has been “a once in a lifetime chance to emerge stronger from the pandemic, transform states’ economies, create opportunities and jobs for the Europeans”. On 18 December 2020, the European Parliament and the Council reached an agreement on the Recovery and Resilience Facility, the key instrument at the heart of NextGenerationEU.
The plan is supported by a huge long-term investment at the level of €750-800 billion. The Recovery and Resilience Facility, RRF is the centerpiece of NextGenerationEU plan to support reforms and investments in the EU countries. The aim is to mitigate the economic and social impact of the coronavirus pandemic and make European economies and societies more sustainable, resilient and better prepared for the challenges and opportunities of the green and digital transitions. The EU member states are presently working on their recovery and resilience plans to access the funds under the RRF.
NextGenerationEU will also bring additional money to other European programs or funds such as Horizon2020, InvestEU, rural development and/or the Just Transition Fund (JTF).
More in: https://ec.europa.eu/info/strategy/recovery-plan-europe_en

RepowerEU plan
In March 2022, the Commission published a Communication “REPowerEU: Joint European action for more affordable, secure and sustainable energy”, which intended also a rapid phase out of Russian fossil fuels and acceleration of the European Green Deal. The same month, the EU leaders at the European Council agreed with the ideas and asked the Commission to develop a comprehensive plan by the end of May 2022; the request was fulfilled by the presentation of the REPowerEU plan.
The REPowerEU plan is more than about a rapid reducing the Union’s dependence on Russian fossil fuels; it is also about fast forwarding the member states’ green transition and achieving a more resilient energy system and a true European “energy union”. Therefore, by building on the Fit for 55 package and the actions on energy security of supply and storage, the main plan’s filed of action are towards saving energy by promoting energy efficiency and enhancing diversity of energy supplies, quick substituting fossil fuels by accelerating Europe’s clean energy transition and smartly combining investments and reforms.
REPowerEU builds on the Fit for 55 proposals tabled last year and calls for their speedy adoption. It does not modify the headline ambition of achieving at least -55% net greenhouse gas emissions by 2030 and climate neutrality by 2050, but it does propose a legal amendment to raise the targets therein for energy efficiency and renewable energy to 13% and 45% respectively.
Reference to: https://ec.europa.eu/commission/presscorner/detail/en/qanda_22_3132

The RRF is also at the heart of the implementation of the REPowerEU Plan, the Commission’s response to the socio-economic hardships and global energy market disruption caused by Russia’s invasion of Ukraine. In this respect, on 18 May 2022, the Commission proposed to make targeted amendments to the RRF Regulation to integrate dedicated REPowerEU chapters in Member States’ existing RRPs. This comes in addition to the large number of relevant reforms and investments which are already in the RRPs

“Fit-for-55” proposals
The idea of the “Fit-for-55” proposals appeared in September 2020 after a comprehensive impact assessment showing an ambitious possibility to increase the EU’s 2030 net emissions reduction target to at least 55%, compared to 1990 levels. Behind the proposals are sufficient financial resources: e.g. the EU’s long-term budget for the next seven years to provide support to the green transition. About 30% of programs under the €2 trillion 2021-2027 Multiannual Financial Framework and NextGenerationEU are dedicated to supporting climate action; besides, about 37% of the €724 billion Recovery and Resilience Facility, RRF which will finance the EU states’ national recovery programs under the NextGenerationEU in climate action.
For example, three transport-specific initiatives – ReFuel Aviation, FuelEU Maritime and the Alternative Fuels Infrastructure Regulation – will support the transport sector’s transition into a future-proof system. It will create a market for sustainable alternative fuels and low-carbon technologies, while putting in place the right infrastructure to ensure the broad uptake of zero-emission vehicles and vessels.
Source: https://ec.europa.eu/commission/presscorner/detail/en/IP_21_3541 (published on 14 July, 2021).

Perspectives
The Commission regularly sends its positive preliminary assessment of the member states’ fulfillment of the milestones required for this payment to the Economic and Financial Committee (EFC), asking for its opinion. The EFC’s opinion is to be delivered within about four weeks and take into account the Commission’s assessment.
Following the EFC’s opinion, the Commission will adopt the final decision on the disbursement of the financial contribution, in accordance with the examination procedure, through a comitology committee: the disbursement to the member states would take place following the adoption of the decision by the Commission.
The Commission’s assessment of further payment requests to the member states will be based on the fulfillment of the milestones and targets outlined in the Council Implementing Decision, reflecting progress on the implementation of the investments and reforms.
The EU amounts disbursed to the member states are regularly published in the “Recovery and Resilience Scoreboard” (see the link below), which shows progress of the implementation of the national recovery and resilience plans.

More information in the following Commission websites: = Preliminary assessment; = Proposal for a Council Implementing Decision; = Annex to the Proposal for a Council Implementing Decision; = Staff-working document; = Recovery and Resilience Facility; = Recovery and Resilience Scoreboard; = Recovery and Resilience Facility Regulation; = Question and Answers on the Recovery and Resilience Facility; = EU as a borrower website.
The Delegated Regulation 2021/2106 setting out the common indicators of the RRF was published in February 2021 and entered into force on 2 December 2021; hence the EU member states were obliged to reveal to the Commission first reports on the common indicators by February 2022; then after amendments, the deadline was extended.
On Regulation in: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=OJ:L:2021:057:TOC; Official Journal of the European Union, L 057, 18 February 2021.
Recent modifications in the EU’s recovery-resilience program – in particular, concerning the state aid facilities – are described in: https://www.integrin.dk/2022/08/09/national-recovery-and-resilience-plans-complex-political-economys-measures/

 

 

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