Reshaping Economic Governance: The RRF as a new reform technology

The adoption of the Next Generation EU and the introduction of the Recovery and Resilience Facility (RRF) as a response to the economic and social crisis caused by the Covid-19 pandemic has initiated a major shift in EU economic governance. This change had profound implications for the technology of EU-driven reforms. Our analysis compares the RRF with previous reform technologies employed by the European Union (EU) and, in particular with the most recent and extensive reform programme attempted, the Economic and Adjustment Programmes (EAPs) adopted and implemented during the Eurozone crisis. By doing so, our article aims to explore how different EU reform technologies affect the process of EU economic governance and set the stage for domestic policy implementation by member states. We propose that the RRF contains two novel features that sharply differentiate it from the EAPs and represent a significant step forward in the Union’s economic governance practices with respect to policy implementation. First, the RRF assumes a degree of unity within the EU, since member-states are treated as stakeholders of a polity, and equal beneficiaries of a reform technology introduced to assist in their economic recovery. This feature, which is very different from the blame-game associated with thew EAPs, has in turn, led to high national ownership of reforms. This was less evident during the Eurozone crisis, as the economic adjustment programs reinforced a hierarchical relationship between borrower and creditor member-states. Second, the RRF relies on a pattern of monitoring and evaluation (M&E) premised on objective and technocratic criteria. This renders the RRF process more credible for member state governments and reduces the room of political manoeuvre that governments had enjoyed during the EAPs. It also rewards compliance with a predetermined set of milestones and targets that have been agreed upon by the Commission and the member states over a number of years, especially through the Commission’s Country Specific Recommendations (CSRs) of the European Semester. To examine its propositions, the article focuses on illustrative examples from member states that have experience with both the EAPs and the RRF, meaning Cyprus, Greece, Ireland, Portugal and Spain. Overall, assessing the function and outcomes of the RRF is of paramount importance for the EU as if it proves successful, its performance-based lending features can be used as a blueprint for future EU programs and funding instruments, including the forthcoming Multiannual Financial Framework (MFF).