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The Recovery and Resilience Fund: Breakthrough for a stronger Europe?

The Recovery and Resilience Fund | IE GPA

An evening of conversation on the agreement to unlock de EU Recovery Fund.

The European response to the pandemic crisis has been very decisive: despite the health and economic crisis and great uncertainty, Europe has been able to come together, rise to the challenge and sign “a historic agreement”. This was the shared opinion of the panelists at an online session hosted this Thursday by the Transatlantic Relations Initiative of IE School of Global and Public Affairs and the Observatory of the European Union (EU).

Paz Guzmán, Senior Expert at the Recovery and Resilience Task Force, EU Commission, and Sergio Cuesta, Deputy Director and Vice Sherpa, Department for the European Union, Cabinet for the President (Spain), were the guest speakers at this webinar, moderated by Salvador Llaudes, Co-chair of the Observatory on the European Union.

Once the pandemic hit Europe, the negotiations started almost immediately, spearheaded by Spain, they agreed. Paz Guzmán Caso de los Cobos, who is an economic advisor at the Representation of the European Commission in Spain and has provided policy advice to governments and international organizations, also pointed out that Spain has played a “prominent role in shaping the European debate around the funds.”

In addition, Sergio Costa underlined the capacity of the EU to face the challenge and was confident in the capacity of the countries to absorb all these grants and transform their economies. “We tried to get out of this difficult situation and the way we chose was to stick together and change the framework.”

They reminded the audience that COVID-19 was not on the EU’s agenda. The main 2020 events were the United States election and the EU budget – the Multiannual Financial Framework. “The MFF negotiations had started months before the pandemic hit Europe. There was no agreement at the time on the seven-year budget. What we have achieved today would have been unthinkable back then”, explained Paz Guzmán, who is also Co-Chair of the Observatory on the EU.

“It was a historic agreement, it was not any conventional approach. The way we are going to raise this money is a revolution from a finance perspective.”

Paz Guzmán de los Cobos

The three experts analyzed how the implementation of the agreements will take place and to what extent this chapter will shape the future of the EU. The new Fund, which will provide an unprecedented financial injection in EU economies, should help not only with the recovery, but also to transform the European economies, to boost the green transition and the digital transformation, and to make our societies more resilient, Sergio Costa highlighted.

“It is a challenge in itself to be able to use this money effectively and to make the most of it”, he considered. “There are 60 billion in grants and 80 billion in loans in the next year and 100% must be allocated by 2023,” he said.

In his opinion, this represents a huge opportunity for member countries: “This COVID crisis, one which affects health, society, politics, and the economy, can also turn into an opportunity, as the Funds have proven, to come together and maximize these available resources.”

Regarding the Spanish strategy, Costa indicated that there are ten policies that reflect four axes that coincide with the objectives of the European Union: the ecological transition towards a decarbonized economy, the digital transformation, social and territorial cohesion, and gender equality. “This is where the money can be put to very good use,” he concluded.