Comment

How can the EU lecture us when it's breaking its own treaty on a grand scale?

Despite insisting its borrowing is always "based on treaty", the EU struggles to be so sure about its Covid recovery plans

Ursula von der Leyen with Angela Merkel, Emmanuel Macron and Mark Rutte
Ursula von der Leyen with Angela Merkel, Emmanuel Macron and Mark Rutte Credit: FRANCISCO SECO/POOL/EPA-EFE/Shutterstock 

There is enormous gnashing of teeth and rending of garments over the government’s Brexit fallback bill and its supposed breach of an international treaty.

The EU should remove the beam in their own eyes on this one, before trying to remove the speck in the UK’s.

The EU’s Coronavirus Recovery Fund – now known by the hubristic title of Next Generation EU - was agreed at a European Council Summit in July, and sets up a €750bn package of grants and loans, which the EU will borrow on international financial markets and then disburse.

The EU has represented to international financial markets that its borrowings are always “based on Treaty” i.e. on the Treaty on the Functioning of the EU or TFEU. In this case the Article of the TFEU justifying the Fund itself and the borrowings which enable it is Article 122. This permits the EU to act upon the agreement of the European Council to a proposal from the European Commission.

Indeed the Coronavirus Recovery Fund is in formal terms a proposal of the Commission and it was agreed by the Council at the summit. But the legitimacy ends there, because Article 122 authorises EU-level action in only two eventualities.

The first is to take “measures appropriate to the economic situation, in particular if severe difficulties arise in the supply of certain products, notably in the area of energy”. Covid-19 has not caused severe difficulties in any supply, and certainly not in energy.

The second one is to remedy “severe difficulties caused by natural disasters or exceptional occurrences beyond its control”. Covid-19 could possibly be construed as a natural disaster (although flooding might be a more obvious one) or as an exceptional occurrence. However, this sub-clause is prefaced with “Where a Member State is in difficulties…”. In other words the sub-clause should only be used in the case of a single Member State being affected, not all of them at once.

If either of these sub-clauses were to be invoked, it could reasonably be expected that the actions proposed by the European Commission would in all cases be direct remedies to what had occurred, and that the actions would be taken immediately. The EU’s Coronavirus Recovery Fund will only pay out over a 3-4 year period, and the funds will be disbursed to pay for actions that are indirect impacts of Covid-19 and may arguably not be impacts of Covid-19 at all.

Article 122 makes no mention of the control mechanism that the EU is putting in place for Member States to access funds, which amount to national recovery plans over which the EU will exercise supervision rights not included in the treaty.

The EU has obtained an opinion of its Legal Service 9062/20 dated 24th June 2020 about the legitimacy of basing the Coronavirus Recovery Fund on Article 122. The opinion is 68 pages long, a sure sign of the Fund’s tenuous basis in Treaty. Were the connection to be clear and obvious, the opinion would have been 5 pages long. Instead it is a “dodgy dossier” of the type familiar to one particular and vocal former UK Prime Minister – a dossier demanded by politicians to create legal cover, spuriously if necessary, for a course of action the politicians had already decided upon.

The UK need take no lessons from the EU about breaches of international treaties: the EU is in the process of doing so and on the grand scale with its Coronavirus Recovery Fund.