Coronavirus recovery fund clash looms as MEPs demand a say

Romanian liberal MEP Dragoș Pîslaru | Genevieve Engel/European Union

Coronavirus recovery fund clash looms as MEPs demand a say

Romanian MEP says European Parliament needs a role to ensure ‘political legitimacy.’

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Updated

The European Parliament will fight for its right to police how governments spend nearly €673 billion of EU funds to counter the coronavirus pandemic’s economic fallout.

That’s the battle cry from Romanian liberal EU lawmaker Dragoș Pîslaru, who’s shepherding the recovery fund through Parliament together with co-rapporteurs Siegfried Mureşan, a fellow Romanian in the European People’s Party, and Eider Gardiazabal from Spain in the Socialists & Democrats.

“This is a question of political legitimacy,” Pîslaru said in an interview at a café facing the Parliament on Place du Luxembourg in Brussels. “We’re going to defend that until the end.”

The 44-year-old’s calls come as the three leading members are hoping to unveil a first draft on August 26 of the legislation to create a Recovery and Resilience Facility, which will offer €312.5 billion in grants and €360 billion in loans to governments grappling with COVID-19 under the deal reached by EU leaders.

The co-rapporteurs still have to sort out some personal differences on the bill. But if they can form a united front, their parties would have a majority in Parliament to negotiate with the Council of governments.

The MEPs’ demand for a say over use of the money challenges the compromise that leaders struck on July 21 after five days of talks.

Under the accord from that summit meeting, the Commission would have the primary say over distributing aid, but governments would have a mechanism to pause payouts to ensure that applicants follow through on pledges to make their economies greener and more digital.

The Council won’t be eager to reopen its deal. Renegotiating the terms could delay the aid for countries such as Italy and Spain to avoid mass bankruptcies and unemployment, according to officials from national treasuries.

Introducing parliamentary checks when people are dying, and while economic output and employment are crashing, would be “politically unacceptable,” one of the treasury officials said. So far, the coronavirus has infected more than 1.5 million people in the EU, killing more than 130,000.

Leverage point

Pîslaru said he’s sensitive to those concerns and hopes the Commission, Council and Parliament together can develop a “leaner” governance system than what leaders agreed on last month.

“I was voted [in] by more than 2 million people in Romania” in last year’s election, the former labor minister said. “How am I supposed to go back to them … and say that we don’t have any leverage, whatsoever, on how the money is going to be spent?”

Guntram Wolff, director of the think tank Bruegel, said the lawmakers are right to demand an “emergency brake” to pull if EU money is being used unwisely.

“The real place to discuss the tradeoffs for these kinds of things is and should be the European Parliament, because that’s the supranational political body,” he added. “I wouldn’t call it bureaucracy. I would call it political.”

The bill based on the July summit requires the Commission to seek the views of deputy finance ministers before signing off on aid plans. Deputies can hold up funds for three months if they fear that a government is ignoring reform requirements, so that leaders can discuss the infraction. The clause was a demand of the self-styled “Frugal Four” of Austria, Denmark, the Netherlands and Sweden.

Pîslaru said he hopes to develop a process that includes the Parliament without bogging down payments.

The Parliament could get a check on the procedure by having the Commission award grants or loans via delegated acts, he said. Under that process, the Parliament or Council can reject a Commission decision by majority vote within a certain time, usually one to three months. “Obviously, this would actually bring an extra layer of bureaucracy,” the Bucharest native allowed.

Terms and conditions

Pîslaru, Mureşan and Gardiazabal plan a key round of talks on August 24 to settle disagreements such economic policy conditions that the EPP and other conservative groups want to include in national reform plans.

These conditions could force governments to limit their budget deficits and reduce their public debt. S&D strongly opposes the idea.

Pîslaru sees little sense in it, too, especially with the EU debt and deficit rules suspended until at least 2022 to help governments deal with the health crisis.

“We shouldn’t actually introduce conditionality” as long as the budget rules are on ice, Pîslaru said.

The lead MEPs do agree, however, on strengthening safeguards against payouts to countries that disregard EU law — potentially giving the Commission leverage in disputes with Hungary and Poland.

The lawmakers also want to expand the scope of reforms that countries can spend the recovery cash on. The July text only mentions green and digital projects.

Pîslaru said the Parliament wants to specify four more areas for investment: industrial policies in line with a Commission paper from March; social needs such as schooling, housing and health care; updating public administrations; and support for youth such as education and exchange programs.

“There are surveys suggesting that in some parts of Europe, the appreciation of youth vis-à-vis the EU dream is actually fading,” he said. “I think that’s one of the most dangerous things that is happening.”

This story has been updated to reference the size of the Recovery and Resilience Facility in 2018 prices.

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Authors:
Bjarke Smith-Meyer 

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