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NUMERO 22 - 10/08/2022

The Recovery and Resilience Facility and National Political Dynamics: A midsummer night(mare)?

Can internal political dynamics derail the deployment of the Recovery and Resilience Facility pot of money destined to a Member State? Many of the media reactions to Prime Minister Draghi resignation lamented the abruptness and undesirability of such an event heralding a time of turmoil for Italy. There are probably many reasons to be worried and among those the possible difficulties in meeting deadlines to unlock EU Next Generation (NGEU) funds disbursement have often been mentioned. Whilst the EU has allotted Italy the biggest slice of its Recovery and Resilience Facility pie in both grants and loans, Italy still has to meet many targets and milestones of its National Recovery and Resilience Plan (NRRFP) in order to access the NGEU funds. Meeting these goals would free the next €19bn installment to be received in early 2023. The concern is that a caretaker government would not be able to provide the impetus to introduce the necessary reforms and changes to accomplish the RRF targets. Delays and generally political inertia may then cause the EU to revisit the so far rather positive approach shown towards the Italian NRRFP. How internal political dynamics are going to play out in the implementation of the various national plans is of course a much broader issue and not limited to Italy only as it is a question that could in theory affect any of the 27 EU Member States. It may then be worth exploring on these extremely hot midsummer nights what actually EU norms say (or don't say) on what to do if things get complicated in one of the Member States.  Needless to say, this is not an easy task for two rather obvious reasons: first, the NGEU package is by now a very hefty file of hard law such as the RRF Regulation, plus other instruments such a Commission guidances, recommendations, European Council guidelines, the whole panoply of EU soft law, and of course the provisions contained in the national plans. Not an easy navigation. The second reason is that such a complex procedural and substantive regulatory framework is also new with limited scope for relying on precedents and a first exhaustive evaluation can only be expected by the end of 2024. There are however few “safe” observations to be made. To anticipate my conclusions: internal dynamics should not particularly affect the RRF scenarios as first the whole system is based on an ex post performance model of enforcement that leaves ample room for accommodating difficulties, delays and implementation problems. Secondly, as the RRF is EU law, a caretaker government or even a newly formed one, would be under a duty to carry faithfully their supranational duties and obligations. Thus, despite being perhaps not an ideal scenario, there are ways as not to transform a political crisis into a nightmare. Lets proceed in order… (segue)

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