Pedro Petiz Viana (Master in Law and Informatics from UMinho / LL.M student in European Law at the University of Leiden).
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Von der Leyen: ‘A lot of work ahead of you…’
António Costa: ‘Now I can go to the bank?’
Von der Leyen: ‘You can go to the bank’
News Conference on the approval by the Commission of Portugal’s Recovery Plan, July 2021.
This dialogue summarizes the increased importance of the Commission stemming from Next Generation EU. In the first line, the Commission takes on its technocratic, ‘administrative-executive’ role, guiding the Member States in their path to economic reforms. In the remaining dialogue, the Commission assumes a more political role, as the guardian of the 750 billion euros vault: Von der Leyen, ‘cheque’ in hand, flying across the Union and holding various press conferences, showing the European public that the Commission is the symbol of European funds to come. Alongside the Commission, national governments have also been empowered by NextGenEU, having been tasked with drafting national recovery plans.
At the same time, national parliaments – and the opposition that sits inside them – have been side-lined. While national budgets must be approved in national parliaments, recovery plans merely require a ‘consultation process’ with national ‘stakeholders’.[1] The European Parliament has suffered the same fate, having the power, essentially, of discussing the application of the mechanism with the Commission. In sum, NextGenEU has empowered the ‘executives’ (the Commission and national governments) while weakening the ‘legislators’ (the European Parliament and national parliaments).
In this paper, we will firstly give an overview of the ‘separation of powers’ arising from NextGenEU. Subsequently, we will briefly touch upon the case of Portugal and finally, we will present the options for national parliaments to counter the executive penchant of NextGenEU.
1. Introduction to the NextGenEU
NextGenEU, European Union’s 750 billion euros recovery plan, is composed by two main legal components:[2] the Regulation establishing the European Union Recovery Instrument, which allocates 750 billion euros across various spending programmes, and secondly, the spending programmes themselves, the most important of which the Recovery and Resilience Facility, which amounts to EUR 672.5 billion/90% of the total NextGenEU envelope.
In this research we shall focus on the Recovery and Resilience Facility. Besides being the main spending programme of NextGenEU, its governance model has been described as lacking ‘democratic elements’[3] due to the side-lining of the European Parliament and national parliaments.
2. The Governance of the Recovery and Resilience Facility
The Commission has been described as the ‘playmaker’[4] of the recovery and resilience facility. In the run-up to the drafting of the recovery plans, the Commission held consultations with Member States and published guidelines on the drafting of recovery plans.[5] Via the recovery and resilience regulation,[6] the Commission was empowered to ‘make observations or seek additional information’[7] regarding recovery plans and most importantly, it was tasked with assessing the plans.[8] After a positive assessment, it makes a proposal for a Council implementing decision, which must be adopted under qualified majority voting.[9] If the Commission decides to suspend commitments, its power is even greater: this decision can only be rejected by the Council by reverse qualified majority.[10]
With regards to the European Parliament, it has the power of inviting the Commission to the ‘recovery and resilience dialogue’,[11] through which it can obtain information from the Commission on equal terms with the Council[12] and where it may express its views via non-binding resolutions.[13] It can control the exercise of delegated acts by the Commission under Article 33 of the Regulation, which can be revoked at any time.[14] However, it had been recommended by the literature that the approval of the recovery plans by the Commission should be based on a delegated act, which would give the European Parliament (and the Council) a veto power over it.[15] The final text of the regulation did not contemplate this option, since the approval of recovery plans will be based on a implementing decision by the Council.
With regards to national parliaments, these are not mentioned in the recovery and resilience regulation. Again, it had been recommended that the regulation would establish “a binding obligation on member states to let their national parliament approve NRRPs before submitting them to the Commission”,[16] or “to establish the need for ratification”[17] however, no such obligations were included in the final text of the regulation.
3. The Implementation of the Recovery and Resilience Facility in Portugal
As stated above, while national budgets must be approved in national parliaments, recovery plans merely require a non-binding ‘consultation process’ with national ‘stakeholders’.[18] This institutional framework has led to a peculiar situation in Portugal. While it was the first Member State to have its recovery plan approved in June 2021,[19] the Portuguese National Budget was rejected by the National Assembly in October 2021.[20] In the meanwhile, the Commission has sent a letter to the Portuguese Finance Minister, questioning the “implications of the rejection of the draft law on the State Budget for 2022 (…) for the implementation of the recovery and resilience plan”.[21]
Under Portuguese Law, the rejection of the State Budget implies that the previous budget shall remain in force.[22] This means that the government cannot incur expenses that were not foreseen in the budget for 2021.[23] Therefore, some of the milestones in the Portuguese recovery plan that require public expenditure, such as the construction or renovation of 26 000 households by 2026[24] do not seem to be legally achievable, since the Portuguese State is currently not allowed to incur in further expenses. If the recovery and resilience regulation had established that recovery plans had to be approved first by national parliaments before being submitted to the Commission, legal and political certainty would have been guaranteed.
This brings us to another conundrum: the immutability of the recovery plans versus the changeover of national governments. According to Article 21 of the recovery and resilience regulation, recovery plans are only amendable when relevant milestones and targets are no longer achievable ‘because of objective circumstances’.[25] The regulation seems to have adopted the position that recovery plans are only amendable under a change of circumstances or under force majeure: a purely technical or legal criterion. However, the possibility of executive changeover requires that recovery plans are subject to ‘ongoing political review’,[26] it should be possible for political parties to present their alternative policy choices with regards to recovery plans. As described by Middelaar, one of the roles of political opposition is to provide ‘dissent’:
‘By producing its own plans, legislative proposals, or visions of the future, the opposition shows that other political choices are conceivable. It is disastrous for a political system if people start to feel there is no other option, that “they are all the same”’.[27] (italics added).
The words of Rui Rio, the leader of Portugal’s largest opposition party, reveal the limitations that recovery plans have placed on the opposition. Mr Rio was interviewed in November 2021 on his position regarding the Portuguese recovery plan in the event of his party winning the next legislative elections. His response was:
‘Within what is possible, according to the law, I will try to give more support to the economy and to businesses as opposed to public works, but insofar as this is possible. Because frankly this at moment I don’t know what room for manoeuvre the next government may have in relation to what has already been proposed in Brussels’[28] (italics added).
The recovery and resilience facility seems to have blocked any possibility of ‘dissent’: the electoral programme for the next 5 years[29] has already been decided. Subsequent governments may now only abide by the principle of pacta sunt servanda.
According to Article 32 of the recovery and resilience regulation, the Commission will provide an evaluation of the facility which may also be accompanied by amendments to the regulation. Unfortunately, this process is scheduled only for the 20th of February 2024.[30] Several election cycles, in various Member States, will have passed by then.
4. How can national opposition and national parliaments have a bigger role in the implementation of recovery plans?
With regards to the problem of national opposition that has been outlined above, a possible solution would be for the Commission to interpret Article 21 of the recovery and resilience regulation not merely via a technical prism, but also with a political vision: newly sworn-in governments should be allowed to submit a reasoned request to the Commission in order to amend their recovery plans and bring them into line with the electoral programmes chosen by their voters. This would allow recovery plans to be brought into the ‘political arena’ and subject to ‘on-going and recurrent political review’.[31]
With regards to the lack of influence of national parliaments, one might adapt the literature on the topic of the European Semester – and the possible strategies of national parliaments within this framework – to the context of NextGenEU. In a similar way as has occurred with NextGenEU, the European Semester is mostly focused on the dialogue between the Commission and the representatives from each Member State governments: a ‘democratic deficit from executive dominance’.[32] When analysing the European Semester, Crum states that ‘political authority is left suspended between the national governments, who are unaccountable as a collective, and the European Commission, which lacks a political mandate of its own’.[33] A parallelism might be established here with the recovery and resilience facility. This author therefore presented an option in order to increase political responsibility and accountability into the European Semester: ‘marking the political movement’.[34] This means that one must ‘identify the key political moments in the iterative process’.[35] In the case of the European Semester, this corresponds to the setting of the economic priorities by the March European Council.[36] In the case of the recovery and resilience facility, one could identify the ‘recovery and resilience dialogue’ as an important political moment, in which the Commission reports to the European Parliament. Therefore, if plenary debates are scheduled in national parliaments in order to coincide with the dates of the recovery and resilience dialogues, it would be possible to ‘piggyback on the temporary wave of media attention’[37] and bring public attention to the issue of the implementation of national recovery plans, since plenary debates ‘allow MPs to articulate their positions’[38] on European Affairs, communicate them to the public and bring about a ‘slow politicization of EU economic Governance’.[39]
National parliaments can also step up their informal contacts and visits with the Commission. Via the Barroso Initiative, national parliaments have gained the possibility of directly questioning the Commission on its draft legislation.[40] A possible improvement on the Initiative could consist of a greater involvement of national parliaments in order to address the accountability deficit of the Commission[41] in the recovery and resilience facility.
The interparliamentary network created by the Early Warning Mechanism could also be used by national parliaments not only to exchange information,[42] but also to establish interparliamentary and transnational oppositional forces. During the negotiations for the NextGenEU, the phenomenon of transnational opposition has already occurred: the ‘frugal opposition’, Rutte and Kurz, attempted to persuade the ‘European Public’[43] with Rutte writing for Corrirere della Serra, Christian Lindner quoting Rutte in the Bundestag, a mobilization of ‘transnational networks of opposition’.[44] Parliamentarians from different Member States could also appeal to this ‘European Public’.
The funds disbursed by recovery plans will amount to dozens of billions of euros, with the application of these funds having enormous political, social and economic consequences.[45] If NextGenEU is to ‘become the model of Europe’s future economic governance’,[46] national parliaments must reinforce their involvement in the implementation of recovery plans and tackle the ‘democratic deficit’[47] that has arisen from the recovery and resilience facility.
[1] Regulation 2021/241 of 12 February 2021 establishing the Recovery and Resilience Facility [2021] OJ L57/17, (henceforth ‘Regulation 2021/241’), Art 18(4)(q)
[2] Bruno De Witte, ‘The European Union’s COVID-19 recovery plan: The legal engineering of an economic policy shift’, (2021), 58, Common Market Law Review, Issue 3, 635
[3] Lucas Guttenberg and Thu Nguyen, ‘How to Spend It Right – A More Democratic Governance for the EU Recovery and Resilience Facility (2020) Hertie School <https://www.delorscentre.eu/en/publications/detail/publication/how-to-spend-it-right-a-more-democratic-governance-for-the-eu-recovery-and-resilience-facility> accessed 12 October 2021
[4] Francesco Corti and Jorge Nunez-Ferrer, ‘Steering and Monitoring the Recovery and Resilience Plans: Reading between the Lines’ (Social Science Research Network 2021) SSRN Scholarly Paper ID 3834480 <https://papers.ssrn.com/abstract=3834480> accessed 18 December 2021.
[5] Commission, ‘Commission Staff Working Document Guidance to Member States Recovery And Resilience Plans’, SWD(2021) 12 final
[6] Regulation 2021/241
[7] ibid, Article 19
[8] ibid
[9] Ben Crum, ‘How to Provide Political Guidance to the Recovery and Resilience Facility? (2020) <https://www.europarl.europa.eu/thinktank/en/document/IPOL_IDA(2020)651371> accessed 7 November 2021, 10.
[10] Regulation 2021/241 Article 10(3)
[11] ibid Article 26
[12] ibid Article 25
[13] ibid Article 26(2)
[14] ibid Article 33(3)
[15] Guttenberg and Nguyen (n.º 3).
[16] Sonja Bekker, ‘The EU’s Recovery and Resilience Facility: A Next Phase in EU Socioeconomic Governance?’ (2021) 9 Politics and Governance 182.
[17] Crum (n.º 9), 21.
[18] Regulation 2021/241 Art 18(4)(q), Recital 39
[19] Commission, ‘Proposal for a COUNCIL IMPLEMENTING DECISION on the approval of the assessment of the recovery and resilience plan for Portugal’ COM/2021/321 final
[20] Proposta de Lei 116/XIV/3, https://www.parlamento.pt:443/ActividadeParlamentar/Paginas/DetalheIniciativa.aspx?BID=121193> accessed 28 November 2021
[21] Available at https://ec.europa.eu/info/sites/default/files/economy-finance/letter_minister_leao_2022_budget.pdf
[22] Lei n.º 151/2015 de 11 de setembro, Lei de Enquadramento Orçamental, Art 58
[23] Lei n.º 151/2015 Art 58(4)
[24] COM/2021/321 final
[25] Regulation 2021/241 Art 21
[26] Crum (n.º 9), 21.
[27] Luuk van Middelaar, Alarums & Excursions: Improvising Politics on the European Stage (First English-language edition, Agenda Publishing 2019), 219.
[28] São José Almeida and others, ‘seis perguntas a dois candidatos: O futuro do PSD’ Publico, (21 November 2021) https://www.publico.pt/futuro-do-psd, acessed 28 November 2021
[29] Recovery plans’ milestones and targets last until 31 august 2026
[30] Regulation 2021/241 Article 32(1)
[31] Crum (n.º 9), 21.
[32] Yannis Papadopoulos and Simona Piattoni, ‘The European Semester: Democratic Weaknesses as Limits to Learning’ (2019) 5 European Policy Analysis 58.
[33] Ben Crum, ‘Parliamentary Accountability in Multilevel Governance: What Role for Parliaments in Post-Crisis EU Economic Governance?’ (2018) 25 Journal of European Public Policy 268.
[34] ibid
[35] ibid
[36] ibid
[37] Reason by analogy with Wilde’s position on the European Council, in Pieter de Wilde and Tapio Raunio, ‘Redirecting National Parliaments: Setting Priorities for Involvement in EU Affairs’ (2018) 16 Comparative European Politics 310.
[38] Valentin Kreilinger, ‘Scrutinising the European Semester in National Parliaments: What Are the Drivers of Parliamentary Involvement?’ (2018) 40 Journal of European Integration 336.
[39] ibid
[40] Davor Jančić, ‘The Barroso Initiative: Window Dressing or Democracy Boost?’ (2012) 8 Utrecht Law Review 78.
[41] “The principle of political accountability is an essential component of democratic government whereby the executive branch is under a duty to provide parliamentary bodies with adequate explanations, clarifications and reasons for its action. Within the context of the Barroso Initiative, this means that the Commission is under a duty to justify its policies to national parliaments.” ibid
[42] Wilde and Raunio (n.º 36)
[43] Luuk van Middelaar, Pandemonium: Saving Europe (Liz Waters tr, Agenda Publishing 2021), 51
[44] ibid, p. 143
[45] Guttenberg and Nguyen (n.º 3)
[46] Tiago Antunes, ‘Should #nextgenerationeu Become a Model for the Future Economic Governance of Europe?’ (@tiagoant, 23 October 2021) <https://twitter.com/tiagoant/status/1452014349728600064> accessed 19 December 2021.
[47] Papadopoulos and Piattoni (n.º 31)
Picture credits: Endzeiter.
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