Corona aid: how the EU is putting pressure on the Czech Republic, Hungary and Poland – economy

He is now 18: On Monday, EU finance ministers approved the Irish and Czech government project plans for corona aid in a video conference. The concepts of the first 16 Member States had already been approved before the summer break. This allows the money to flow out of Brussels. Seven other plans are still under examination by the Commission; only two states – Bulgaria and the Netherlands – have so far submitted nothing to the authorities due to the difficult formation of governments. In the case of Poland and Hungary, the review is explosive due to rule of law concerns. But even with the Czech Republic, sensitive discussions were necessary before approval.

Czech Prime Minister Andrej Babiš must defend himself against the accusation of conflicts of interest. Before starting his political career, the billionaire created the Agrofert group, which benefits from EU agricultural subsidies. Babiš divested its stake in trust funds in 2017 to refute the allegations, but a European Commission audit report concludes that it continues to exercise control. Commission Vice-President Valdis Dombrovskis said on Monday that the disbursement of corona aid was linked to the Prague government implementing eight measures to better monitor and control the correct use of EU funds. There were “weaknesses” in this area.

The EU’s Corona Aid Fund comprises a total of € 806 billion. 724 billion of this amount will be distributed through a new program called the Development and Resilience Facility, the rest will go through other programs to EU countries or support Commission initiatives. The Development and Resilience Facility is expected to transfer around € 338 billion in grants to governments by 2026; most of it goes to Spain and Italy. An additional 386 billion euros are available for low interest loans. However, to benefit from this windfall, governments must submit reform and investment plans. This must be approved by the Commission, after which the EU finance ministers must agree.

The plans must meet various criteria, such as providing sufficient funds for climate protection and digitization. In addition, it is not enough to simply suggest interesting investments, for example in fiber optic cables or thermal insulation of houses. Governments must at the same time promise economic and social policy reforms, following the recommendations that the Commission publishes annually for each country – and which so far have often been ignored.

In the case of Poland and Hungary, these recommendations state that the independence of the judiciary should be strengthened: no wonder, after all, that in addition to various infringement procedures, special EU procedures are also ongoing against the two countries because the rule of law and the fundamental values ​​of the EU are threatened. In the opinion of the Commission, the reform and investment plans of Hungary and Poland for the billions of crowns do not yet sufficiently reflect these recommendations. Therefore, the authority has not yet released the plans.

Does Polish law take precedence over European law?

The conflict with Poland could escalate, as the constitutional court is supposed to judge whether the Polish constitution is above EU law. The government sees it that way, but for the Commission it would be an affront and a threat to the functioning of the European Union. The verdict has been postponed until September 22. Commission Vice-President Dombrovskis threatened that his agency would examine “the possible consequences of this shutdown for the ease of development and resilience and the implementation” of the Polish plan. For Poland, that’s around € 24 billion in grants – money the Warsaw government urgently needs, Commission officials say.

The first tranches of the Development and Resilience Facility have already been received in ten Member States. Since the beginning of August, the Commission has transferred nearly 50 billion euros: nearly 25 billion euros have gone to Italy, nine billion to Spain, five billion to France, four billion to Greece and one good two billion to Germany. In order to fill the corona pot, the commission is allowed for the first time to take on large-scale debt. Since June, the authority has therefore placed bonds in three rounds and raised 45 billion euros. Starting in the fall, the community also wants to use eco-bonds for this purpose. Budget Commissioner Johannes Hahn wants to present the details of the green promissory notes on Tuesday.

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