The way EU states will spend money from the Recovery Package, including the subsudues energy transition, will be not only under the scrutiny of the European Commission, but also the Council of the European Union. Other countries will decide what we will be spending the money on. We are surprised Prime Minister Mateusz Morawiecki agreed to this – Jan Olbrycht, MEP from the European People’s Party and one of the EP’s main negotiators of the 2021-2027 EU budget, said in an interview with BiznesAlert.pl.
BiznesAlert.pl: What is the European Parliament’s position on the EU Recovery Package?
Jan Olbrycht: As the Parliament we are glad heads of EU states adopted the EU Recovery Package to boost the economy. However, we are disappointed about the decision to lower subsidies in the final agreement. We have doubts about the guarantees on the way the loans will be paid off on the basis of new own revenue, which is currently created, and about the EP’s role in implementing this mechanism. The Parliament does not have any say on how this Fund is created. The governments are responsible for dividing the money. The EP has no influence only over financial control and spending. It also has indirect impact through support measures, i.e. the Multiannual Financial Framework. At the same time, sectoral regulations are subject to a process where decisions are made jointly. The Parliament also participates in drafting the regulations’ legal basis.
According to the law, the European Parliament has limited competencies, which is different in the case of the 2021-2027 EU budget. What is the EP’s position on the Multiannual Financial Framework (MFF)?
The Parliament rejected the political agreement on this issue in its current form. There are too many cuts when it comes to spending. We are ready to engage in constructive negotiations with the Council to improve the motion. The EP is warning that cuts to the MFF are against the EU targets. The proposed cuts to health and scientific research programs are dangerous during the coronavirus. The EP it also believes the proposed cuts to education, digital transition and innovation put at risk the future of the next generations. What is more, the cuts to programs that support the transition of regions dependant on coal, go against the European Green Deal. The European Commission ensured the cuts in the EU budged will be compensated with sufficient measures from the Recovery Package. That program was to be dominated by grants. However, those were decreased while loans were increased. The Parliament believes that the majority of the subsidies should be constituted by grants to complete the EU budget, that was reduced in comparison to the original proposition. In our view there should be more grants to supplement the slashed budget of the EU.
The regulations on the rule of law and their various interpretations are very controversial. What is the Parliament’s position?
It is the EP’s view that the agreement on the distribution of the budget and the Recovery Package failed to introduce strong and efficient measures. The EP has called for making the voting procedures more precise. In my opinion, by signing the conclusions, the Prime Minister agreed to condition the spending on the assessment of the rule of law. Let me remind you that in order for the Recovery Package to be adopted, national parliaments need to unanimously ratify it as well. This could be used by countries such as Poland or Hungary as a bargaining card.
What is the Parliament’s position on the Just Transition Fund?
The Just Transition Fund was supposed to be worth EUR 30 bn. It was slashed to EUR 10 bn. This is a lot less than the Commission wanted.
This is why it makes sense to get on board with climate neutrality. Did Poland agree to this target?
The conclusions of the July summit are clear. Any state that will not adopt the EU 2050 climate goals will by default not receive 50 percent of the money from the Fund. Poland is to receive EUR 3.5 billion, which means that if it does not support the targets, it will only receive EUR 1.75 bn. The other half will be frozen until the country adopts the goals. Since Prime Minister Morawiecki signed it, he must have agreed to such a solution. Some politicians claim that Poland had agreed to the climate neutrality goal in December 2019, and that is how they interpret the complicated phrasing used in the conclusions from that summit.
It is hard to agree with such an interpretation. According to the conclusions of the European Council, Poland raised objections about the 2050 climate target, and the Council vowed to go back to the issue during the next summit. In the meantime Poland did not agree to the target. Let me stress this was about neutrality at the EU level. There was no mention of national targets in the conclusions. However, in my opinion similarly to what happened in case of the rule of law, Prime Minister Morawiecki de facto said yes to climate neutrality and its conditionality, but I am sure he does not agree with it, just like in the case of the rule of law.
During the Council new sources of revenue for the EU were also negotiated, such as the carbon footprint tax and the digital tax. How does the Parliament assess this idea?
Let me remind you why this has been done. The Council was looking for ways to bankroll an unprecedented recovery fund after the pandemic. From our perspective heads of EU states failed to solve the problem of paying off the debt as part of the recovery fund. The Parliament maintains that only by establishing new own resources will the EU be able to pay off its debt, save its budget and ease the tax pressure on budgets of the EU states and citizens. I would like to stress that the sole idea of own revenue for the EU is about making the bloc stronger.
Is the Parliament satisfied with the level of spending on climate targets?
The discussion on increasing spending on climate goals has been taking place at the Parliament for years. Depending on the faction, we have been talking for years on what percent of the budget should go to climate. According to the EC, it is possible to spend 25 percent on real climate investments. Which investments will pertain to climate protection will depend on the taxonomy, a document that describes which investments will be treated as directly environmentally friendly and which will meet this goal only indirectly. So, this is where the real fight over which investments will be treated which way will take place. Of course the Parliament’s Greens would like the exceptions to climate goals to exceed 30 percent. However, in the end 30 percent of total expenses from the Multiannual Financial Framework and the Next Generation EU will be spent on climate projects. The expenditure from both sources will have to be in line with the EU 2050 climate neutrality target.
How will the Recovery Package be distributed?
After the Parliament, the Commission and the Council agree on the final shape of this Fund, the member states will be obliged to present national programs. Government in every country, including Poland, will have to prepare a 3-year spending program. It will have to meet the guidelines of the so-called European semester on the reforms and investments necessary to save the economy after the coronavirus, and at the same time implement the targets of the European Green Deal and the Digital Agenda. These plans need to be presented to the EC, which may either accept or reject them. This is not all. Once the EC gives its approval, the Council of the EU, in which governmental minsters participate, will vote whether the spending plan of a given country meets the EU targets or not. In practice this means that other member states will decide whether and how we will spend EU subsidies in our country. So far that assessment was reserved for EU institutions only. This is completely new. The Polish Prime Minister agreed to this. We were surprised by this decision. The voting will take place by qualified majority. In result large coalitions of states will form to support each others’ plans. The Parliament believes this is a mistake.
Where did this way to monitor the money come from?
The Dutch are behind this proposal, they were also against increasing budget spending. During the Council in July they announced that since they would be paying into a new and extraordinary Fund and since the EU would be able to, among others, borrow on the market, they wanted to have an extraordinary mechanism to control the spending. If the Council of the European Union decides it does not work, the issue may be dealt with by prime ministers, i.e. the European Council. This means the EU Council will have to approve all state programs on which the EC will give its opinion. Since the voting will be done by qualified majority, the votes of our region, the Visegrad Group, will not be enough and it will be necessary to build wide coalitions with other countries. Additionally, after two years the EU Council will verify whether there were any irregularities with regard to spending.
What’s next for the conclusions of the July summit?
The conclusions of the European Council provide guidelines, which will be a kind of a negotiation mandate for the EU Council, i.e. the ministers. When it comes to the Multiannual Financial Perspective, a document adopted unanimously by ministers needs to be approved by the EP as well. The EP will precede its decision with negotiations on the size of the budget for individual policies. The Parliament’s position will also depend on negotiations on the so-called sectoral regulations, on which the Parliament makes a joint decision with the Council. The shape of these regulations will also determine the implementation of the Recovery Package. When it comes to the Recovery Package, the summit’s conclusions gave a green light to the Council to start the procedure on changing the decision on own resources.
What will happen if the Parliament says no to the budget?
In such a case, the treaties say that the level of expenses from the last year of the previous budget perspective are to be repeated. In result, the sectoral regulations will need to be extended. However, we are ready for talks on the budget and we are waiting for the Council’s decision.
Interview by Bartłomiej Sawicki