It’s yet another thorny issue to solve for the EU’s 27 countries racing to reach a deal before the start of 2027, when national elections are due in France, Italy, Poland and Spain, which could make discussions even more difficult.
Major contributors to the budget including Italy, France and Spain, and net recipients of EU funds such as Hungary, Malta and Poland, spoke out against the cash-for-reforms model during Wednesday’s meeting. Critics say that the approach could increase the power of national governments at the expense of regions, and result in the EU imposing reforms with no political backing.
“We don’t want [the Commission’s] recommendations to become impositions,” said an EU diplomat who, like others quoted in this article, was granted anonymity to speak freely.
One the other hand, Netherlands defended the plan during the meeting, according to the diplomats. Other fiscally conservative states, such as Sweden and Denmark, have long argued that conditionality could help poorer EU countries become economically more efficient
But two EU diplomats from the rival camp argued that their real motivation is to slow down payments to less affluent regions.
The RRF model
The cash-for-reforms model was tested in the EU’s post-Covid recovery fund, the Recovery and Resilience Facility (RRF), where payouts were linked to judicial and pensions reforms among others.