Brussels Freeze Out Recovery Fund Against Jan Crisis

First stumble Negotiations and procedures to launch the new budgetary framework of the European Union still do not advanceat the desired pace and it is already consideredimpossible that the 750000 million euros of the European recovery fund against the crisis will be available from next January 1

The Council and Parliament have been locked in a battle of numbers with some 39 billion euros at stake And the lack of agreement keeps the process of ratification of the new accounts paralyzed in the national parliaments

The accumulated delay will ruin the expectations of the President of the Spanish Government Pedro Sánchez and the Italian Prime Minister Giuseppe Conte who have repeatedly demanded that the extraordinary resources to alleviate the impact of the pandemic arrive at the beginning of the year

Spain and Italy are the two countries that benefit the most from the fund and expect to receive 60000 and 65000 million euros in subsidies respectively

But the community manna will take time to arrive and sources from the European Commission indicate that the first disbursements will not occur until the second half of 2021 almost a year and a half after the start of the covid19 pandemic

It will not be possible to have the Recovery Fund ready by January 1 assures a highranking diplomat in Brussels It is already impossible

In his opinion it is easy to calculate the times we are already almost at the end of October and even if there were a sudden agreement with Parliament the Council would still have to endorse it and ratification would finally be needed in the national Parliaments a process that could take two or three months

The two institutions maintain an accelerated schedule of meetings to try to settle the discrepancies The negotiation has not come to a standstill but is continuing says a parliamentary source

And he adds that there are at least three meetings scheduled for the next few days At this weeks meeting both sides maintained their positions

The Council continues to flatly refuse to add a single euro to the agreement reached at the European summit in July which set the Multiannual Financial Framework for 20212027 at 1075 billion euros and the recovery fund named Next Generation EU at 750000 million

And the European Parliament demands to add another 39000 million to the Financial Framework and provide it with a mechanism that allows suspending European subsidies to countries where the rules of the rule of law are not respected

The lack of agreement also keeps in the air the process of national ratification of the socalled Own Resources Decision the essential legal text for the financing of the Financial Framework

Some countries such as Hungary and Poland even reserve that letter and threaten not to ratify the Decision if the monitoring mechanism of the rule of law is dangerously hardened for their interests

The veto of a single country to this legal text could ruin the entire architecture of the historic budget agreement reached at the July summit after five days and four consecutive nights of negotiation

The presidency of the Council of the EU occupied this semester by Germany has offered Parliament the possibility of a technical solution

Some of the possibilities would be to add items of community revenue that until now went to the national coffers as is the case of the fines of the European Commission for violating the competition rules or the remnants that remain in the annual budgetary exercises

The German presidency estimates that these two sources could report some 31000 million euros and be used for the 15 programs that the European Parliament considers key such as university exchanges Erasmus and research Horizon

But these are uncertain sources of income they will depend on the number and amount of the fines and the degree of execution of the budgets which is why the Parliament demands at least 9000 million euros of additional fresh money

The Council rules out any additional figures because it would force the 27 EU governments to return to the negotiating table and the laborious July agreement could unravel in the face of renewed demands from the countries most affected by the pandemic or the reluctance of the socalled frugal countries including the Netherlands

Parliamentary sources deny any responsibility for the possible delay of the Recovery Fund and attribute it to the slowness of the capitals in ratifying the Own Resources Decision

The same sources recall that the European Parliament gave the green light to that Decision on September 15 after an accelerated process to facilitate its ratification

But Parliaments negotiations with the Council have skirted the precipice from the start At the first meeting the parliamentary delegation rose from the table after twenty minutes This weeks has left a less bitter aftertaste it lasted three hours

To which should be added a new problem with the covid raging again it is plausible that soon the negotiations will no longer be possible in person And a confined and telematic agreement seems even more complex

The two parties have managed to bring positions closer on the other open fronts

Diplomatic sources see a horizon of agreement in the governance of the budget and in the setting of a timetable to provide the EU with new sources of income such as a border tax on imports from countries with excess CO2 emissions

The pact is also on the horizon in relation to the mechanism to link the distribution of European funds to respect for the rule of law one of the theoretically insurmountable walls

That chapter could be close to being resolved in the next two weeks says a source familiar with the negotiation

The dispute over the final figure of the budget agreement would finally remain in the air And although neither the Council nor Parliament are throwing in the towel both institutions see it as practically impossible for the Financial Framework and the Fund to be in force on January 1 as planned

The European Commission already warned before the pandemic that a delay in the approval of the new accounts would cause great damage in the management of community resources

Brussels estimated that in the framework in force on January 1 more than 100000 projects financed with the structural funds could not start on time some 5000 research jobs would be at risk and more than a million students would not receive the scholarships of the Erasmus program

Added to this impact is the delay in the startup of the Recovery Fund and the uncertainty about the arrival of the first resources The 27 EU partners are already facing in addition a second wave of infections much faster and more virulent than expected which will aggravate according to community sources the economic debacle and increase the financing needs of the most affected countries

The President of the European Council Charles Michel has called an extraordinary summit for next week by videoconference with a view to trying to coordinate containment measures and avoid the border lockdown last spring