The scandal with the "Recovery Fund", 500 billion euros risk "burning"

2024-04-08 17:06:00, Kosova & Bota CNA

The scandal with the "Recovery Fund", 500 billion euros risk

European Commission

European Union member states have received less than a third of the initial 723 billion euro fund to boost economic recovery after the Covid pandemic, and are now pressuring the European Commission to speed up payments, writes Politico.

Countries are asking the Commission to cut red tape, which prevents them from receiving their share of the fund or even discourages them from applying in the first place. It expires in 2026, raising fears that large sums of money will be lost.

According to Politico, the Recovery Fund is embroiled in a corruption scandal, with Italian police arresting more than 20 suspects across the EU as part of an investigation into a fraud of more than €600 million.

A national official complained to Politico about the hurdles member states had to overcome to access the money, which consists of grants and loans. Another diplomat said governments were beginning to feel that seeking loans under the Recovery Fund was "not worth it".

The commission is considering ways to speed up the disbursement of cash, according to people with knowledge of the private discussions. The EU's executive body has already cut the total amount available from 7,233 billion euros to 648 billion euros after governments failed to apply for nearly 100 billion euros of loans before an interim deadline of the end of 2023.

When the European Union created the Fund in 2021, it overturned one of the bloc's long-standing taboos on countries pooling money together in debt markets. However, the money must be distributed by the end of 2026.

So far, the Commission has released only 225 billion euros. Spain, which was supposed to be the second-biggest beneficiary after Italy, has received just 340 million euros in loans - a tiny fraction of the 83 billion euros earmarked for 2021.

Countries must submit a "recovery plan" that sets out how the cash will be used and what reforms they will promote in return. Now they are asking the Commission to process this documentation at a faster pace.

"The commission cannot change the regulation, but it can choose the interpretation" of the rules for releasing the funds, said Atanas Pekanov, a former Bulgarian government official who was closely involved in drafting his country's recovery plan. "They can be more or less strict and decide what has been met enough."

A key reason for the inclusion, according to the report, is that the Commission sees the Fund as a tool to force governments to carry out reforms on a range of issues, including pensions and democratic standards, that have been pending for years./ CNA