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European official: No reforms, no money from helping fund

Christian Fernsby ▼ | May 28, 2020
The European Union’s top economic officials warned that the bloc’s 750 billion-euro ($826 billion) recovery package won’t give countries blank checks, as grants and loans will be conditional on the implementation of reforms and will have to focus on the region’s green and digital priorities.
Paolo Gentiloni
Economy Chief   Paolo Gentiloni
A day after the European Commission proposed an unprecedented stimulus plan to help the bloc’s economies weather the coronavirus-induced recession, Vice President Valdis Dombrovskis and Economy Chief Paolo Gentiloni set out the terms under which the 27 member states would be able to benefit from the funds.

At the heart of the plan is the so-called Recovery and Resilience Facility, a 560 billion-euro tool designed to provide large amounts of money to finance investments and reforms in order to help economies rebound. But to access the funds, EU governments will need to prepare plans setting out their reform and investment agenda up to 2024.

If the plans are approved, the commission will disburse the grants and loans in installments upon the completion of certain milestones that the countries will have proposed themselves.

Gentiloni stressed that this process will involve nothing like the strings attached seen in crisis-era bailouts like the ones for Greece.

“I want to be very clear, this is not about conditionality and intrusion from Brussels,” he said. “It is about member states taking ownership of strengthening their own growth and social fabric and making it coherent with our priorities, first of all the green and digital transitions.”

Despite his reassurance, these terms may not go down well in capitals like Rome, which has been in a perpetual push and pull with Brussels over its annual budget plans and where politicians have traditionally been loath to cede any more powers over their economic policy to the EU. To others, the need for the proposed investments and reforms to significantly address Europe’s green and digital ambition may also be tricky, as their economic policy focus lies elsewhere.