How the Netherlands Lost (and Won) the Negotiations on the Covid Recovery Fund. An Embedded Process Tracing reconstruction

This paper provides a unique insider reconstruction and analyses of the coming about of the 750 billion Covid Recovery Fund (RRF). It does this from the perspective of one prominent and visible member states, the Netherlands, which arguably was the biggest ‘loser’ in these negotiations. On the basis of intensive cooperation with insiders from all relevant levels and departments of the Dutch national administration, the paper is able to reconstruct the process-level dynamics from mid-March 2020, when the idea of ‘Corona-bonds’ was parachuted onto the Heads’ Agenda, up until the ‘historic’ deal on the MFF and Recovery Fund, of 21 July. On a theoretical level, this case is very telling in terms of how the EU deals with the major crisis or dossiers of the moment, specifically from the perspective of leadership and new inter- and intra-institutional dynamics in a supposedly more intergovernmental EU. The Covid-19 crisis was again undoubtedly ‘Chefsache’. Yet, it was characterized by a handicapped European Council and rotating Council Presidency, which together hampered the ability of (small) member states to oversee and control developments. This provided room for a type of joint Commission-German leadership, whereby the German Chancellor provided the political coverage, that allowed the Von der Leyen Cabinet to move forward rapidly (‘don’t forget to talk to us’). The question that this paper seeks to answer is why, in spite of being well represented in the small Commission in-group that dealt with the dossier (Gert Jan Koopman, Maarten Verwey) and being a close ally of Germany on financial matters, the Netherlands lost track of developments and was unable to turn the tide or steer developments in a more favourable direction? What lessons can be learned in terms of negotiating and influencing strategies in this new system of European Council centered governance.? We argue that a big part of the answer lies in becoming more (pro)active in the machine room processes in the run-up and follow-up to high level Summitry. The Netherlands – supported by the other frugal countries - was able to win a couple of important battles in the endgame negotiations (a.o through the emergency break procedure). However, the war had already been lost in the shadow of a series of European Council and Eurogroup video teleconferences in March/April, when Commission were quietly laying out the tracks for a package that de facto resulted in the first ‘EU bond’.