Spain’s coronavirus recovery plan gets green light from Brussels

The news comes as draft guidelines from the European Commission link funds to respect for the rule of law and proper management of aid – a change that reflects concern over authoritarianism in Poland and Hungary

European Council President Charles Michel (l) greeting Hungarian PM Viktor Orban in February.
European Council President Charles Michel (l) greeting Hungarian PM Viktor Orban in February.Omar Marques (GETTY)

The European Commission on Wednesday endorsed Spain’s €69.5 billion coronavirus recovery and resilience plan, giving it top scores on 10 out of 11 criteria under evaluation. Spain will receive €37 billion over the next year-and-a-half, subject to a series of reforms. But Brussels has accepted that Madrid will not provide specifics about pension and job market reform until after the government sits down for talks with unions and employers.

“This plan will deeply transform Spain’s economy, make it greener, more digital, more resilient,” said the president of the European Commission, Ursula von der Leyen, who traveled to Madrid to celebrate the news with Spanish Prime Minister Pedro Sánchez.

Under the plan, €3 billion will go towards the digitalization of small- and medium-sized enterprises (SMEs) and another €3.4 billion to transform the tourism sector, which has been devastated by the coronavirus crisis. A further €3.4 billion has been earmarked for measures that promote a green economy, such as renovating buildings with poor energy efficiency.

This plan will deeply transform Spain’s economy, make it greener, more digital, more resilient
President of the European Commission, Ursula von der Leyen

Brussels believes the plan could lead to a 2.5% rise in Spain’s gross domestic product (GDP).

In other news, millions of euros in European aid will be suspended for member states that “prevent an effective judicial review of administrative decisions” involving the use of EU funds, according to draft guidelines by the European Commission that EL PAÍS has seen. The text sets out ways to apply a mechanism that links EU funding to respect for the rule of law. It warns that there will be case-by-case investigations and that any deterioration of the rule of law that might endanger proper management of EU funds “could justify proposing measures that would entail a significant financial impact for the concerned member state.”

For some members such as Poland or Hungary, EU funds make up around 60% of public investment. The mechanism was approved late last year with these countries in mind, following their drift into authoritarianism. But for the sake of consensus, its application was restricted to violations of the rule of law with a direct impact on the EU’s financial interests, not on broader violations. Even so, Brussels is hoping that the mechanism will be effective against a range of challenges across the EU, from attacks on judicial independence to conflicts of interest (a case in point being the prime minister of Czech Republic, whose business empire receives EU funds), as well as cases of corruption tied to the management of European money, including the new coronavirus recovery fund.

Erosion of the rule of law

While the EU agreement reached in late 2020 already envisioned suspending fund transfers when “the independence of judges is in danger,” the new draft guidelines make judicial independence a pillar of the system, and they also detail the kinds of violations that could lead to a loss of funds.

The guidelines take aim at “national laws that prevent an effective judicial review of administrative decisions to implement the EU budget,” and at countries that take steps to obstruct the review of relevant cases by the EU Court of Justice.

This latest move by Brussels reflects growing concern by many member states over the transfer of significant amounts of money to countries experiencing a gradual erosion of the rule of law and separation of powers. These concerns have grown with the EU’s new €1.8 trillion long-term budget for 2021-2027, including the €750 billion NextGenerationEU recovery instrument.

But Brussels insists that the mechanism is not aimed at any state in particular. Disciplinary measures have been taken in the past against unexpected members: Germany was once nearly sanctioned for exceeding the 3% public deficit limit, a move it finally averted despite years of breaches. And after Greece was found to have manipulated its public accounts to conceal its own soaring deficit, the EU introduced a series of sanctions that were first used against Spain, where the regional government of Valencia had engaged in similar activities.

In October 2020, Spain received a warning from the European Commission over the issue of judicial independence, due to a planned reform of the way members are elected to a regulatory body known as the General Council of the Judiciary (CGPJ). Spain’s minority government, led by a center-left coalition of the Socialist Party (PSOE) and Unidas Podemos, eventually dropped the plans. Brussels said it would continue to watch developments closely, and recommended that Spain seek advice from the Venice Commission, an advisory body of the Council of Europe that supervises sensitive reforms to ensure democratic quality and best practices.

English version by Susana Urra.

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