With this proposal, the Commission would undertake to raise up to € 750 billion on the markets by issuing bonds through the Recovery Instrument. The 500 billion share in non-refundable grants exactly respects the request made by Angela Merkel and Emmanuel Macron, to which Brussels proposes to add an additional 250 billion in loans that the beneficiary States will have to repay. The “frugal” states (Austria, Denmark, Sweden and the Netherlands) ask instead to limit support to the exclusive granting of loans.
The Commission proposal will now have to be negotiated by the 27 governments, which will have to seek a compromise between themselves and with the European Parliament. It will be weeks, but perhaps months of difficult negotiations.
THE DOCUMENT (English version, we will publish the Italian one as soon as possible)
Certainly the resources of the Recovery Fund will not be distributed unconditionally. To gain access to their quota, governments will have to present a “National Plan for Recovery and Resilience” in which they will indicate the reforms and investments they intend to finance. If they are judged in line with the recommendations of the Commission and with the EU priorities, then the disbursement will start. This will make the Recovery and resilience Facility work, the tool that forms the heart of the Recovery Fund.
The entire floor is divided into three pillars. The “Recovery and resilience Facility” represents the most substantial part of the first, which also includes a program for the direct provision of funds (React-EU) to local authorities, hospitals and small-medium enterprises, as well as the rural fund and that for the ecological transition. The second pillar is dedicated to interventions to recapitalize companies in difficulty and to investments, while the third concerns the health sector, research and civil protection.
The funds of the «Facility» will be distributed among the countries on the basis of specific criteria and distributed in the form of loans or subsidies. But Brussels will ask states to “make their economies more resilient and better prepared for the future”. A trace of possible useful interventions to request access to the funds can be found in the EU recommendations published last week. Brussels – among other things – asks Rome to strengthen its health system, but also to “improve the efficiency of the judicial system and the functioning of the public administration”. The PA reform to simplify the bureaucracy could therefore be a valid reason to ask for funds, as well as the tax reform, given that the EU has always asked to put order in the jungle of “tax expenditures”.
The bonds issued by the Commission will have a very long duration, up to 30 years. For the return to the markets of the 500 billion disbursed, the EU executive proposes three different solutions: an increase in the contributions of States to the EU budget, a cut in EU programs or new taxes collected at European level. The hypotheses include an extension of the emissions trading system, the Carbon Tax, the Web Tax and a corporate tax. All highly divisive issues that will have to be negotiated and approved by governments.