The EU’s Recovery and Resilience Facility (RRF) enables the European Commission to raise funds on capital markets which are then made available to member states to aid their recovery from the COVID-19 pandemic. Nils Oellerich and Jasper Simons argue that while the RRF appears to strengthen the role of the Commission, domestic political parties remain key to its policy output.
By most accounts, the EU’s Recovery and Resilience Facility constitutes an important step forward in the process of deepening European integration and the strengthening of supranational decision-making. It enables the EU to issue its own debt and allocate the resulting resources to member states following clearly laid-out policy priorities.
The RRF is tied to existing modes of policy-coordination, namely the European Semester. There is a strong link between investments and structural reforms and the Commission is able to apply conditionality to the disbursement of funds. Interpretations of the process emphasise the novelties of this setup and even identify a ‘Hamiltonian moment’ in the making of European statehood. Some commentators take the previous setup of the European Semester as a point of departure and view the application of conditionality as a strengthening of the supranational Commission.
However, an analysis of the design of local adaptations of the Recovery and Resilience Facility in member states – the national Recovery and Resilience Plans – reveals that member state governments remain in the driving seat when determining precise investments and reforms. The process of designing Recovery and Resilience Plans amounts to a coordinated mode of policymaking between the Commission and member states. Moreover, even in those member states most dependent on EU funding, the political preferences of national governments are visibly reflected in the final plans, through which government parties are able to pursue their partisan agendas.
In a new study, we demonstrate this dynamic in three Central and Eastern European countries: Estonia, Romania and Slovakia. All three countries are large net-recipients of EU funds in general and the Recovery and Resilience Facility in particular. One would therefore expect the Commission to be especially influential in the design of the respective Recovery and Resilience Plans.
Yet, our analysis shows that in each case the policy approach reflected in the plans corresponds to the partisan profiles of the respective governing parties. We also find that domestic policy preferences are important in the individual coordination efforts between the member states and the Commission. Governments’ leverage is mediated, however, by low fiscal and state capacity, which increases the influence of the Commission.
Three local configurations and their partisan roots
In Estonia, many of the investments included in the country’s Recovery and Resilience Plan aim to provide support directly to the private sector to support digitisation and the uptake of green technologies. At the same time, there are larger investments targeting public infrastructure such as a hospital in Tallin and the strengthening of e-government services.
These priorities are shaped by different governing parties: the vertical, private sector focus is supported by a cross-partisan developmental paradigm prescribing ICT-based leapfrogging and the development of the digital economy more generally. The Tallin hospital, on the other hand, caters to a key electoral constituency of one of the governing parties – the Centre Party – and was advanced as a political priority in previous coalition talks. On both dimensions, the Commission has accommodated government preferences despite initial scepticism especially regarding the hospital.
The Romanian plan, in contrast, is marked by the provision of more basic physical infrastructure such as the development of the country’s railway and motorway networks and there is little attention given to private sector support. These elements also adhere to the governing parties’ policy preferences as the hesitancy to embrace the modernising green and digital agendas of the EU became a salient party-political issue.
The investment in motorways emerged as an especially contentious aspect given its adverse environmental impact. Moreover, the liberal profiles of both major governing parties – the PNL and USR-PLUS – translate into a rejection of direct state intervention into the economy by way of subsidies and a preference for the maintenance of public infrastructure instead. While the Commission ultimately agreed to Romania’s plan, it was able to impose several structural reforms – such as a large-scale pension reform – in light of the persistent low fiscal and state capacity of the Romanian government.
Slovakia opted to aim its plan at public and physical infrastructure, emphasising the fields of healthcare, education, research and legal institutions, as well as mobility and building renovations. Education and healthcare in particular have been publicly prioritised by the government, which managed to include associated investments in partial agreement with the Commission.
The focus on bolstering core state functions can be considered a political priority of the largest coalition partner at the time – OL’aNO – whose ideological outlook almost exclusively centres on anti-corruption. Similar to Romania, the relative unimportance of private sector investment is in accordance with the profiles of several coalition partners – OL’aNO and SaS in particular – as they were set on preventing more vertical industrial policies.
Future policy coordination in the EU
The outlined examples all demonstrate the role of national governments and the political parties that comprise them in deciding on various investments and reforms included in national Recovery and Resilience Plans. While in principle the Commission has the capacity to oppose measures that conflict with its own policy preferences, it nevertheless frequently accommodated governments’ interests.
The Commission has undoubtedly been strengthened by the Recovery and Resilience Facility overall, but it has often chosen not to use its powers to veto member state preferences. Its ability and willingness to impose its own preferences depends on domestic factors related to fiscal and state capacity. While it was in the interests of certain member states to give the Commission a central role as a supranational supervisor in the implementation of the Recovery and Resilience Facility, this has not precluded domestic politics from influencing the subsequent policy output.
This also has implications for the legitimacy of policies. Policies that at least partly adhere to both the agenda of the Commission and the preferences of domestic political parties have the potential to foster a more effective pipeline through which EU-level policies can be translated to the local level. They may also lead to increased national ownership of reforms.
The realisation of this potential also depends on member states’ efforts to consult with social partners and civil society actors. Existing studies (as well as our analysis) point to significant shortcomings and room for improvement in this respect, which may prove crucial in discussions on the survival of this mode of policy-coordination beyond the Recovery and Resilience Facility.
For more information, see the authors’ accompanying paper in the Journal of European Public Policy