Because the Recovery Fund yes and the Month no? Sooner or later someone will have to explain this paradox. In recent months, Prime Minister Giuseppe Conte has repeated several times that the State-saving Fund "is not an adequate tool" for tackling the crisis and that what the country needs is the Recovery Fund. Now, if we compare the financial endowments it is certainly like this: from plan approved on Tuesday Italy will collect 208 billion, while the Mes is worth it required 36. However, if we look at the rules to be respected to access the two instruments, the story changes, but it is not written anywhere that the two funds are mutually incompatible.
The 5 Star Movement, with the support of the opposition of the League and the Brothers of Italy, rails against the State-saving Fund stating that, in the event of activation, we would be forced to comply with a series of unfavorable obligations. Yet, in reality, the Mes provides for much lighter conditions than the Recovery Fund.
THE RULES OF THE MONTH…
After the reform approved in April, countries that ask for money from the State Rescue Fund must comply only one constraint: to use those resources for health needs related to the Covid emergency. The funds can be used for direct expenses (for example the purchase of equipment or the hiring of doctors and nurses), but also for "indirect" expenses, a deliberately ambiguous formula which makes it possible to cover investments in the most diverse sectors (in theory, we could use that money also to pay for the single desks necessary to guarantee anti-contagion distancing in schools). Finally, the loans from the Mes - to be repaid in 10 years with an interest of 0,1% - could be collected within few weeks and Brussels' controls would arrive ex post, ie with reporting by Italy after purchases are made.
…AND THOSE OF THE RECOVERY FUND
To access the money from the Recovery Fund, on the other hand, much more stringent "conditionalities" are required.
First, you have to "align with the recommendations received from Brussels”, clarified the number one of the Commission, Ursula von der Leyen. "Until now it depended only on the countries to comply with them or not, but now the recommendations are linked to subsidies and credits". And then they become orders.
Governments must undertake to comply with EU guidelines, explaining how and when they intend to do so in an official document, the National Reform Programme, which must be approved by the European Commission and by Ecofin (the latter by a qualified majority, i.e. at least 15 out of 27 countries, provided that together they represent at least 65% of the European population).
This time, however, putting a series of promises on paper is not enough: they must also be respected, otherwise the aid tap can close at any moment. Thanks to a mechanism called “emergency brake”, the disbursement of the money is interrupted if one or more states believe that the beneficiary country is deviating from the commitments undertaken, or is not respecting the Pnr. The case is then discussed in the Council, even if the last word on the funds belongs to the Commission. The entire process lasts a maximum of three months and does not include any veto right, but it can still turn into a political weapon to condition governments on reforms.
As for the timing, the funding will not arrive before second quarter of 2021, but countries will also be able to use them to retroactively cover expenses incurred since February.
In light of all these differences, the activation of the Recovery Fund risks producing an apparently paradoxical effect, that of strengthening the position of those who are in favor of the State-saving fund (Pd, Italia Viva, Forza Italia, Confindustria). Unless, in the meantime, someone between Conte and the grillini finds a convincing answer, which has not yet been found, to the question of the summer: why the Recovery Fund yes and the Mes no?
