12 October 2020
Europe’s recovery plan: a new hope

Europe’s recovery plan: a new hope

The year 2020 will go down in the annals of history. The devastating social and economic effects caused by the COVID-19 pandemic will have a substantial effect on the Europeans' psyche for decades to come. Nevertheless, 2020 was not only the year of the pandemic. The European Union (EU) and its Member States have shown that – when necessary – they are capable of putting their differences aside in favour of a common recovery. European solidarity can be more than mere words.

However, we still have a lot in our hands. As forecasts show an 8,3% decline in our GDP in 2021, the EU has to make sure that bold actions are taken at all levels. For that reason, the Union must work hard towards a sustainable recovery that leaves no one behind. As declared by Elisa Ferreira, the European Commissioner for Cohesion and Reforms, European funds are not expenditure; they are an investment to stimulate sustainable development. And we owe that kind of commitment to our young generations.

 

 

The EU Recovery Plan ("Next Generation EU") and the Multiannual Financial Framework (MFF) deal reached last summer at the EU Council represents an historical step. In brief, the EU Council agreed on the amount of €750 billion for the Next Generation EU, followed by a reinforced MFF of €1,074.3 billion for the years 2021 to 2027. Covered under the Next Generation EU, the so-called Recovery and Resilience Facility, aims to alleviate the social and economic consequences of the COVID-19 pandemic in Europe. It represents 672.5 billion, broken down into EUR 360 billion in grants and EUR 312.5 billion in loans to be committed by the end of 2024.

This historical deal is a step in the right direction and a glimpse of hope for what is ahead. In order to smooth its implementation, regions and cities need to be fully involved. Given that they are the backbone of the European democracy and economy, their role is crucial for the future of Europe and its cohesion. During the first months of the COVID-19 outbreak, they were at the forefront of the battle against the virus. In the future, they must be fully associated with the recovery process.

A Recovery Plan easily accessible to local and regional authorities, is a Recovery Plan accessible to our citizens

Since the beginning of this year, even before the COVID-19 outbreak, the PES Group in the European Committee of the Regions has always advocated for adequate EU funds for cities and regions in order to fight the social and economic disparities in Europe no matter where our citizens live. The COVID-19 pandemic increased our urgent need for action.

For that reason, and as recently mentioned by our PES Group President Christophe Rouillon in an opinion article for Sauvons L'Europe, the accessibility of local and regional authorities to the resources of the Recovery and Resilience Facility is a major point of concern. For now, the governance proposed by the EU Commission for these funds is left exclusively to central governments. Consequently, only they can propose the national plans granted by the European Semester. When it comes to it, we still do not know how it will work and what is the say of our regions and cities on the matter:

The European Semester remains a "black box" in terms of transparency and democratic requirements. Neither the European Parliament, nor the European Committee of the Regions, nor local and regional authorities at national level have a say for the moment.
The European Committee of the Regions therefore calls for the introduction of requirements for the involvement of local and regional authorities in the elaboration of national plans.

 

To reorient the European development model and work towards a sustainable recovery in line with our climate objectives, it is important to act quickly at the local and regional level with funds promptly available. Due to their proximity to the ground and its population, regions and cities have always been pioneers in addressing climate change. This allows them to engage with their citizens and other local stakeholders efficiently and act steadily, giving them the capacity to come up with tailored responses to climate change. The RRF should reflect our ambitions and allocate at least 40% of its expenditure for climate action.

This has always been the position of the European Committee of the Regions and of the PES Group. Juan Espadas, Mayor of Seville, PES Group member and Chair of the Commission for the Environment, Climate change and Energy (ENVE) and of the Green Deal Working Group, said earlier this year that :

"If the European Commission is serious about making the European Climate Law the heart of the European Green Deal, then we need to make sure that cities and regions are involved because such a transformation cannot happen without their commitment. (…) We need more financial resources from the European Union and public spending flexibility so local investment in the insulation of houses and schools or in clean public transport can really take off. At the European Committee of the Regions, we will work relentlessly for a Climate Law that is ambitious and socially fair, while continuing to act every day on the ground with our citizens to build a just transition that leaves no people and no regions behind."

There is also the issue of own resources and how the EU and its Member States should finance this new recovery plan. The entire European recovery plan is built on the possibility of having own resources capable to sustain the European budget of the Union. In the future, we must ensure that that no money should be drained from national budgets nor disguised as a kind of tax on taxpayers or SMEs.

It is therefore necessary to make very rapid progress in putting these new resources in action; otherwise, the budgetary foundations of the European recovery plan will be threatened. This requires rapid progress at the OECD level for the implementation of a tax on digital platforms; it means introducing a carbon adjustment mechanism at the borders by 2023 at the latest; it means introducing an own resource based on non-recycled plastic waste on January 1, 2021 and finally it means relaunching the proposal for a tax on financial transactions.

The EU Commission has since called on the European Parliament and the Council to agree on the legislative proposal so that the RRF operational in action as of the 1st of January 2021. Let's hope that until there, many of these important concerns are taken into consideration.

What we call for: a just Recovery Plan for Europe in response to the COVID-19 pandemic

These pressing matters will be addressed in the upcoming opinion to be adopted on 14 October 2020 of the European Committee of the Regions entitled "Recovery plan for Europe in response to the COVID-19 pandemic: Recovery and Resilience Facility and Technical Support Instrument" for which our president Christophe Rouillon, Mayor of Coulaines (France), is the rapporteur.

Leafing through the pages of this opinion, the ambition of local authorities to improve the current Facility are clearly palpable. Therefore, its objectives include: the urgent need to support the Green Deal, incorporate the Sustainable Development Goals in the European Semester, and the need to govern these funds in cooperation with the local and regional authorities. Cohesion must be at the centre of the proposal and clearly recognised in the objectives of the "facility". Local and regional authorities are essential to that end, and they have been proven capable to set our economies back on a sustainable and inclusive recovery path by strengthening our economic, social and territorial cohesion. They are responsible for more than half the public investment in the EU and hold key political competences and financial responsibilities for achieving the above-mentioned objectives.

It is therefore crucial for the recovery plan to be drawn in close and structured cooperation with these authorities. As we have already mentioned, this is crucial for the effectiveness of the instrument, but also for its legitimacy, fairness and democratic implementation. Taking again the words of the Commissioner Elisa Ferreira: "There is no economic democracy if there is social and territorial exclusion".

To conclude, the Recovery and Resilience Facility must offer our future generations, a new hope. Hope in a Union that works for the next generation through a comprehensive climate action and a sustainable development; a Union in touch with its population with a strong bottom-up decision-making approach; a Union capable of tackling new challenges and set new objectives in line with its ambitions; and finally, a Union that is inclusive and that leaves no one behind.

For that to happen, regions and cities must be fully included in the process. Now, it is in the hands of national governments to make it possible and give Europeans hope in their future.

 

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