Table of Contents Issue 2, 2024

Issue 2 April 2024

Editorial - On the Mid-Term Evaluation of the Recovery and Resilience Facility

Coronavirus; EU budget; EU law; Member States; Own resources; Pandemics

It has been three years and a few months since Next Generation EU (NGEU), the EU recovery package adopted in the wake of the COVID-19 pandemic, was adopted and since the regulation creating its central piece, the Recovery and Resilience Facility (RRF), entered into force.1 The RRF is a temporary instrument created to distribute funds (as loans and grants) to Member States, funds that the Commission raised by borrowing on the capitals markets on the EU's behalf. The money was supposed to help Member States recover from the shock of the COVID-19 pandemic, while also making their economies more resilient for the future and enabling them to pursue other objectives such as the transition to a green economy and digitalisation. To obtain these funds, Member States had to submit Recovery and Resilience Plans detailing their proposed reforms and investments.

The RRF is set to last until 2026 and the regulation establishing it foresees a mid-term evaluation in the middle of the programme's operating time.2 The Commission published its mid-term evaluation report in February 2024.3 The report is a positive one: it concludes that the RRF has had a measurable and positive effect so far on economic recovery and that it has incentivised structural reforms. The Commission states that around 75% of the milestones and targets planned to be achieved by the end of 2023 "either have already been assessed by the Commission as satisfactorily fulfilled or are reported as completed by Member States" (note that those are two very different things).4 The report also praises the flexibility of the RRF, which made it possible for part of the funds to be repurposed in the wake of Russia's invasion of Ukraine.5

The mid-term assessment of the RRF has a narrow focus; its publication, however, does invite broader musings about the NGEU package, after a few years have elapsed since its adoption and the acute crisis that prompted it. In particular, we can reflect on the little progress made in relation to the creation of new EU own resources, and what this means for the question of repayment: how will all the money borrowed by the Commission and disbursed as grants be paid back? The NGEU package envisaged that the EU will be responsible for paying back the money disbursed as grants, through its own budget, by 2058. To this end, it was foreseen that the EU would create, over time, new own resources (i.e. new sources of revenue within the EU's system of "own resources", which includes customs duties and levies; a portion of national VAT; and Member State contributions based on their gross national income). If this does not prove possible, Member States will have to step in and pay back the borrowed money through their own, much larger contributions to the EU budget.

The creation of these new own resources would be significant. First, they would remain in place, at least in principle, beyond the lifespan of NGEU. Second, depending on the type and size of new resources, they could expand the budgetary capacity of the EU in a meaningful way. So far, however, very little progress has been made. Only one new resource has been agreed, a national contribution to the EU budget tied to unrecycled plastic. This first new own resource will not strengthen the EU's budgetary capacity, as each Member State's subsidiary contribution to the EU budget will decrease by whatever amount they have paid in the form of this new "plastic tax".6

Will the EU and its Member States manage to create other, more ambitious own resources? The Preamble of the Decision that reformed the EU's system of own resources as part of NGEU mentioned the potential introduction in the future of a financial transaction tax (already attempted in the past), plus a carbon border adjustment mechanism, a digital levy, and an extended emissions trading system.7 At the time of writing, the Commission has made proposals for a variety of own resources;8 initial plans to propose a Financial Transaction Tax seemed to have been abandoned for now.9 Alas, all of the Commission's proposals have stalled and there seems to be little appetite among Member States for the creation of these new own resources. The fact that Member States will be eventually responsible, through their own larger contributions to the EU budget, for whatever NGEU debt the EU is unable to pay has not been a big enough incentive so far. The question remains whether this will change as the deadline approaches.


1 Council Regulation 2020/2094 establishing a European Union Recovery Instrument to support the recovery in the aftermath of the COVID-19 crisis [2020] OJ L433I/23; Council Decision 2020/2053 on the system of own resources of the European Union and repealing Decision 2014/335 [2020] OJ L424/1 and Regulation 2021/241 establishing the Recovery and Resilience Facility [2021] OJ L57/17.
2 Regulation 2021/241 establishing the Recovery and Resilience Facility [2021] OJ L57/17 art.32.
3 "Strengthening the EU through ambitious reforms and investments" COM(2024) 82 final.
4 "Strengthening the EU through ambitious reforms and investments" COM(2024) 82 final, p.1.
5 As the energy package RePowerEU, which entailed the repurposing of some RRF funds to reduce dependency on Russian fossil fuels and accelerate transition to renewables. Regulation 2023/435 amending Regulation 2021/241 as regards REPowerEU chapters in recovery and resilience plans and amending Regulations 1303/2013, 2021/1060 and 2021/1755, and Directive 2003/87 [2023] OJ L63/1.
6 It is however a novelty in the sense that, for the first time, the creation of an own revenue has been tied to a policy objective (so far, environmental protection through plastic recycling): C. Neumeier, "Political Own Resources: Towards a Legal Framework" (2023) 60 C.M.L. Rev. 319
7 Decision 2020/2053 on the system of own resources of the European Union and repealing Decision 2014/335, Euratom [2020] OJ L424/1, Point 8 of the Preamble.
8 In December 2021 the Commission proposed to allocate to the EU budget a portion of the revenues raised by a new carbon border control adjustment mechanism (CBAM), by a reformed and extended Emissions Trading Scheme (ETS) and, pending future agreement on details, by the adoption of Pillar One of the agreement on a reform of the international tax framework (OECD/G20 Inclusive Framework on BEPS), which would reallocate a share of the residual profits of the largest and most profitable multinational enterprises to EU Member States. "Proposal for a Council Decision amending Decision (EU, Euratom) 2020/2053 on the system of own resources of the European Union" COM(2021) 570 final. In June 2023, the Commission proposed a new temporary statistical own resource based on company profits (a national contribution paid by Member States based on the gross operating surplus for the sectors of financial and non-financial corporations) rather than a Financial Transactions Tax, and made changes to the previous proposals (ETS and CBAM) to facilitate agreement: "An adjusted package for the next generation of own resources" COM(2023) 330 final.
9 "The next generation of own resources for the EU Budget" COM(2021) 566 final, p.5.


  • Involving the Corporate Sector in EU Financing: A Two-Tier Model for a Corporate Income Tax-Based Own Resource - Moritz Scherleitner and Edoardo Traversa
    To address the consequences of the COVID-19 crisis, the European Union (EU) has taken out a significant amount of debt. As agreed in a 2020 Interinstitutional Agreement, efforts are being made to ensure its repayment through new own resources, including a financial contribution linked to the corporate sector or a new common corporate tax base. In this article, we present a two-tier model for a corporate income tax-based own resource that should be levied as an EU surcharge on a broadly harmonised corporate tax base. In doing so, we aim to balance competing interests among taxpayers, administrations, the EU, and Member States, thereby proposing an alternative to the current Commission's proposals.
  • The Obligation to Criminalise Psychological Violence: An Analysis of Article 33 of the Istanbul Convention and its Implementation - Niels Hedlund
    Article 33 of the Council of Europe Convention on preventing and combating violence against women and domestic violence (Istanbul Convention) obliges State Parties to criminalise a psychologically abusive course of conduct. From the evaluation reports published by the monitoring body of the Convention, the Group of Experts on Action against Violence against Women and Domestic Violence ("GREVIO"), it is evident that most State Parties are struggling to comply with this obligation. This article examines the content and scope of the required "course of conduct" in light of most of the national implementations and their evaluation by GREVIO. The article particularly addresses GREVIO's broad interpretation of the elements of "coercion" and "threats" in art.33 of the Istanbul Convention, as well as the characteristics of national offences that are, according to GREVIO, (ill-)suited to cover a psychologically abusive course of conduct, which subsequently illustrates general standards concerning the criminalisation of psychological violence in Europe.
  • "To Thine Own Self Be True": Fundamental Rights, Identity, and the External Autonomy of the European Union - Nabil Khabirpour
    This article argues that, in the field of fundamental rights, the external autonomy of the European Union (EU) has been incorrectly conceived in the image of sovereignty. This, in turn, has led to several inelegant encounters between the EU and external legal systems, notably the EU and the European Convention on Human Rights (ECHR). It therefore makes a case for re-thinking the EU's external autonomy in this domain. The article unfolds this argument in a series of steps. First, it explains the prevailing understanding of the EU's autonomy in a general sense. Second, by analysing the differences between internal and external autonomy, it argues that the former is rightly fashioned in the image of sovereignty, whereas the latter ought at core to be a judicial identity review. Third, it sets out a practical test for the application of this identity review. Finally, it outlines the functional advantages of the proposed approach and discusses implications at the level of constitutional theory. In substantiating these ideas, the EU's ongoing attempts to accede to the ECHR are used as a case in point.

Analysis and Reflections

  • The EU's Dormant Economic Policy Competence: Reliance on Article 122 TFEU and Parliament's Misguided Proposal for Treaty Revision - Merijn Chamon
    On 22 November 2023, the European Parliament adopted a resolution setting out a series of amendments to the European Union (EU) Treaties. One of its proposed amendments relates to the current art.122 TFEU (Treaty on the Functioning of the European Union) and aims to address the constitutional imbalance (from the Parliament's perspective) in that Article. Although Parliament has been excluded from the decision-making pursuant to the legal bases in that Article already since 1958, the stakes of this exclusion have recently been raised, given the Council's prolific reliance on those legal bases to tackle different crises presented to the EU. That recent reliance has also given rise to stark criticism from the perspective of the vertical division of competences, with several commentators noting that the Council's recent measures based on art.122 TFEU are not properly covered by that legal basis. In light of this ongoing debate, the present contribution first addresses the question whether art.122 TFEU properly covers the paradigm shifting measures recently adopted by the Council. On this question, the contribution finds that while these measures lay bare certain fundamental constitutional tensions in EU primary law, one permissible reading of art.122 TFEU indeed allows the Council to adopt those measures. It is further advanced that under one permissible reading of art.122 TFEU, the EU institutions can go even further than they have hitherto done, since art.122(1) TFEU allows the EU to develop its own complementary economic policy. Since it is not denied that the recent art.122 TFEU measures do raise serious constitutional issues, a second question which this contribution addresses queries whether the Parliament's proposed amendments would help reduce those constitutional tensions. On this second question the contribution finds that Parliament's proposal is misguided as it replaces the different horizontal and vertical constitutional imbalances found, with new ones.
  • Animal Welfare in EU Law: Scope and Purpose of Article 13 of the Treaty on the Functioning of the European Union - Jessica Vapnek and Kai Purhagen
    The protection of animal welfare already plays a prominent role in European Union (EU) law. The European Court of Justice (ECJ) has held that EU Member States can take measures in favour of animal welfare even where they affect other interests. More recently, the Commission prioritised animal welfare in its Farm to Fork Strategy, which is part of the Commission's Green Deal. Whereas in EU agricultural law animals are viewed as "agricultural products", art.13 of the Treaty on the Functioning of the European Union (TFEU) also acknowledges them as "sentient beings" whose interests must be taken into account. Moreover, art.13 TFEU states that the Member States should "pay full regard to the welfare of animals." This article proposes reinterpreting the term "full regard" in art.13 TFEU to more vigorously protect animal welfare. First, "full regard" could not only require Member States to take account of animal welfare, but rather to give animal welfare particular weight and importance. Second, the authors argue that animal welfare should be given the status of a general principle in the EU, because animal welfare now plays a prominent and coequal role similar to other general principles like environmental protection. Third, since the ECJ has recognised animal welfare as an important objective, the authors argue that animal welfare should be given higher priority when balanced against other rights and interests. One way to achieve this is to acknowledge that protecting animal welfare (which is the same as protecting animal health) is inextricable from protecting human health. These new interpretations will strengthen enforcement of existing animal welfare legislation, thereby advancing the goal of the Commission's Farm to Fork Strategy of making food systems fair, healthy, and environmentally friendly.
  • LF v SCRL and the Court of Justice of the European Union's Intersectionality Problem - Nozizwe Dube
    In LF v SCRL, the Court of Justice of the European Union (CJEU) was asked to revisit some central elements of its equality case law that are interrelated to intersectionality. Specifically, LF v SCRL challenged the CJEU to transcend the fragmented nature of EU equality legislation by acknowledging intersectional religious and gender discrimination in the context of Directive 2000/78. Secondly, the CJEU was asked to revisit the distinction between direct and indirect discrimination. Lastly, the question whether the CJEU's new intragroup comparator approach could also be extended to Islamic headscarf cases such as LF v SCRL was at stake. This case note shows that while LF v SCRL had a small victory the case reveals the CJEU's persistent problem with intersectionality.

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