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

It is now 18: on Monday the EU finance ministers have one video conference approved the project plans of the Irish and Czech governments for corona aid. 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 being examined by the Commission; only two states – Bulgaria and the Netherlands – have so far not submitted anything to the authorities as a result of the tough formation of governments. In the case of Poland and Hungary, the test is explosive because of concerns about the rule of law there. But even with the Czech Republic, sensitive discussions were necessary before the approval.

Czech Prime Minister Andrej Babiš has to defend himself against the accusation of conflicts of interest. Before starting his political career, the billionaire built up the Agrofert group of companies, which benefits from EU agricultural subsidies. Babiš transferred his shares to trust funds in 2017 to counter the allegations, but a report the EU Commission comes to the conclusion that he continues to exercise control. Commission Vice-President Valdis Dombrovskis said on monday, The payment of the corona aid is linked to the fact that the government in Prague is implementing eight measures with which the correct use of EU funds can be better monitored and controlled. There were “weaknesses” in this area.

The EU’s Corona Aid Fund comprises a total of 806 billion euros. 724 billion of which will be via a new program with the beautiful name Build-up and resilience facilityt distributed, the rest flows through other programs to EU countries or supports Commission initiatives. The Development and Resilience Facility is expected to transfer around € 338 billion in non-repayable grants to governments by 2026; the most goes to Spain and Italy. A further 386 billion euros are available for low-interest loans. In order to benefit from this windfall, however, the governments must submit reform and investment plans. This has to be approved by the Commission, after which the EU finance ministers have to agree.

The plans must meet various criteria, such as providing enough funds for climate protection and digitization. In addition, it is not enough just to suggest nice investments, for example in fiber optic cables or thermal insulation of houses. At the same time, governments must promise economic and socio-political reforms and thereby adhere to the recommendations which the Commission publishes annually for each country – and which have so far been often ignored.

In the case of Poland and Hungary, these recommendations state that the independence of the judiciary must be strengthened: No wonder, after all, in addition to various infringement proceedings, special EU proceedings are underway against both countries because the rule of law and fundamental values ​​of the EU are threatened. In the opinion of the Commission, Hungary and Poland’s reform and investment plans for the Corona billions do not yet sufficiently reflect these recommendations. Therefore, the authority has not yet released the plans.

Does Polish law take precedence over EU law?

The conflict with Poland could worsen, because the constitutional court there is supposed to judge whether the Polish constitution stands 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 was postponed to September 22nd. Commission Vice Dombrovskis threatened that his agency was examining “the possible consequences of this judgment for the development and resilience facility and the implementation” of the Polish plan. For Poland it is about 24 billion euros in grants – money that the government in Warsaw urgently needs, according to Commission officials.

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


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