“Cash for reforms” is not new

The model for this new governance logic is the Recovery and Resilience Facility (RRF), created in response to the COVID-19 pandemic. The principle of “cash for reforms” has already been put into practice under the RRF. Disbursement of funds was conditional on the fulfilment of agreed milestones and targets for reforms and investment. National recovery and resilience plans were required to address a significant subset of the challenges identified in the country-specific recommendations under the European Semester.

In this way, pension reforms were also linked to EU funding. In Spain, for example, the entry into force of a pension reform was included as a milestone in a payment request. In Slovenia, by contrast, the pension reform was divided into several steps – from preparation of the legislative process to the entry into force of the legislative amendments. The individual milestones were linked to different payment requests.

With the National and Regional Partnership Plans, this principle is now to be extended beyond a temporary crisis instrument to a large share of the regular EU budget. At 865 billion euros, the Partnership Plans constitute the largest area of expenditure in the proposed MFF. In future, a substantial share of EU funding could therefore be allocated according to this logic.

This makes the question of which reforms are agreed upon in the Partnership Plans – and who decides on them – all the more important.