Recovery plan for Europe in response to the COVID-19 pandemic: Recovery and Resilience Facility and Technical Support Instrument
ECON-VII/009
Recovery plan for Europe in response to the COVID-19 pandemic: Recovery and Resilience Facility and Technical Support Instrument
This opinion is based on two legislative proposals whose legal bases foresee a mandatory consultation of the CoR.
These proposals (Recovery and Resilience Facility and Technical Support Instrument) replace the 2018 proposal for the Reform Support Programme (RSP) and the 2019 proposal on the governance framework for the budgetary instrument for convergence and competitiveness for the euro area (BICC), which are thereby withdrawn.
The Recovery and Resilience Facility represents the bulk of the Commission's proposed recovery plan, with a total of €560 billion to support investment and reforms in the Member States. Of this total, €310 billion are to be disbursed as grants, and €250 billion as loans. The Facility is to be firmly embedded in the European Semester, as the investment and reforms financed should address the challenges identified in the Country-Specific Recommendations.
The Technical Support Instrument would be the successor to the existing Structural Reform Support Programme (SRSP, established in 2017) and would allow the EC to continue to provide support to MS to develop and implement reforms and improve administrative capacity. The TSI would also support MS in the preparation and implementation of their recovery and resilience plans under the Recovery and Resilience Facility, and the two proposals are therefore complementary.
Many of the views and concerns that the CoR had expressed in previous opinions and resolutions in relation to the SRSP, RSP and BICC, and with regards to administrative capacity, still apply to these proposals. Furthermore the scale of the programme is enormously increased, and so is consequently the importance of the European Semester which is to be at the heart of the mechanism, despite its current limitations.
It is therefore essential for the CoR to defend the views and interests of local and regional authorities and to play and active role in shaping these regulations.
These proposals (Recovery and Resilience Facility and Technical Support Instrument) replace the 2018 proposal for the Reform Support Programme (RSP) and the 2019 proposal on the governance framework for the budgetary instrument for convergence and competitiveness for the euro area (BICC), which are thereby withdrawn.
The Recovery and Resilience Facility represents the bulk of the Commission's proposed recovery plan, with a total of €560 billion to support investment and reforms in the Member States. Of this total, €310 billion are to be disbursed as grants, and €250 billion as loans. The Facility is to be firmly embedded in the European Semester, as the investment and reforms financed should address the challenges identified in the Country-Specific Recommendations.
The Technical Support Instrument would be the successor to the existing Structural Reform Support Programme (SRSP, established in 2017) and would allow the EC to continue to provide support to MS to develop and implement reforms and improve administrative capacity. The TSI would also support MS in the preparation and implementation of their recovery and resilience plans under the Recovery and Resilience Facility, and the two proposals are therefore complementary.
Many of the views and concerns that the CoR had expressed in previous opinions and resolutions in relation to the SRSP, RSP and BICC, and with regards to administrative capacity, still apply to these proposals. Furthermore the scale of the programme is enormously increased, and so is consequently the importance of the European Semester which is to be at the heart of the mechanism, despite its current limitations.
It is therefore essential for the CoR to defend the views and interests of local and regional authorities and to play and active role in shaping these regulations.
Through engagement with other instirutions, notably the EP co-rapporteurs, the CoR opinion on the RRF had significant impact on the final trilogue agreement in December 2020. Indeed, the agreement responds to several key CoR concerns:
it significantly strengthens the importance of cohesion in the proposal, notably with the creation of a "cohesion" pillar and many references to cohesion, territorial disparities (see in particular art. 3 and new recital 2a)
it requires MS to report in their RRP on the consultation process with LRAs (art. 15(3)ja)
it increases the share of climate-related financing to 37%, close to the CoR demand
it introduces “rule of law” conditionality
it makes reporting by MS biannual to reduce administrative burden
However the requirement for MS to establish an MLG process with LRAs for the preparation of the RRPs was not preserved in the final agreement despite having been taken on by the EP in its report (see article 15). And the possibility of transfers from shared management funds was not removed from the final agreement.
it significantly strengthens the importance of cohesion in the proposal, notably with the creation of a "cohesion" pillar and many references to cohesion, territorial disparities (see in particular art. 3 and new recital 2a)
it requires MS to report in their RRP on the consultation process with LRAs (art. 15(3)ja)
it increases the share of climate-related financing to 37%, close to the CoR demand
it introduces “rule of law” conditionality
it makes reporting by MS biannual to reduce administrative burden
However the requirement for MS to establish an MLG process with LRAs for the preparation of the RRPs was not preserved in the final agreement despite having been taken on by the EP in its report (see article 15). And the possibility of transfers from shared management funds was not removed from the final agreement.
THE EUROPEAN COMMITTEE OF THE REGIONS
- welcomes the fact that the budget size of this new instrument, namely EUR 360 billion in grants and EUR 312.5 billion in loans, provides a macroeconomic response commensurate with the scale of the 2020 recession, the worst ever to have been experienced in the history of the European Union. The CoR also supports the balance the proposal strikes between grants and loans. The risk of further widening of socio-economic divergences justifies the rapid adoption and implementation of the "Recovery Plan for Europe" and the post-2020 EU budget as of autumn 2020;
- cautions that the European Semester as a governance mechanism for the Fund (referred to as "Facility") remains a centralised and top-down exercise that is not appropriate for a tool that is supposed to strengthen economic, social and regional cohesion; therefore reiterates its proposal for a code of conduct to involve LRAs in the European Semester. This code is more urgent and necessary than ever if the Semester is to become more transparent, inclusive and democratic, and also more effective, by involving regional and local authorities;
- stresses the role that the proposed instrument must play for the climate, but considers that the recovery plans should be earmarked for at least 40% of spending on climate action to enable the European Union to meet its climate commitments. The CoR also believes that the Commission's proposal should incorporate all the SDGs as a strategic planning framework;
- opposes the option of transferring resources to the instrument from the Structural and Investment Funds, as such an option entails the risk of recentralising and undermining the management of the ESIFs, which operate on the partnership principle.
- welcomes the fact that the budget size of this new instrument, namely EUR 360 billion in grants and EUR 312.5 billion in loans, provides a macroeconomic response commensurate with the scale of the 2020 recession, the worst ever to have been experienced in the history of the European Union. The CoR also supports the balance the proposal strikes between grants and loans. The risk of further widening of socio-economic divergences justifies the rapid adoption and implementation of the "Recovery Plan for Europe" and the post-2020 EU budget as of autumn 2020;
- cautions that the European Semester as a governance mechanism for the Fund (referred to as "Facility") remains a centralised and top-down exercise that is not appropriate for a tool that is supposed to strengthen economic, social and regional cohesion; therefore reiterates its proposal for a code of conduct to involve LRAs in the European Semester. This code is more urgent and necessary than ever if the Semester is to become more transparent, inclusive and democratic, and also more effective, by involving regional and local authorities;
- stresses the role that the proposed instrument must play for the climate, but considers that the recovery plans should be earmarked for at least 40% of spending on climate action to enable the European Union to meet its climate commitments. The CoR also believes that the Commission's proposal should incorporate all the SDGs as a strategic planning framework;
- opposes the option of transferring resources to the instrument from the Structural and Investment Funds, as such an option entails the risk of recentralising and undermining the management of the ESIFs, which operate on the partnership principle.
