It is another difficult issue for the 27 EU countries fighting to reach an agreement before the start of 2027, when national elections are due in France, Italy, Poland and Spain, which could making the discussion more difficult.
Major contributors to the budget including Italy, France and Spain, and general recipients of EU funds such as Hungary, Malta and Poland, spoke out against the cash conversion model during Wednesday’s meeting. Critics argue that the approach could increase the power of national governments at the expense of the regions, causing the EU to impose reforms without political support.
“We do not want the recommendations (of the Commission) to be binding,” said a European Union diplomat who, like others quoted in this article, did not want to be named to speak freely.
On the other hand, the Netherlands defended the plan during the meeting, according to diplomats. Other fiscally conservative nations, such as Sweden and Denmark, have long argued that the conditions could help the EU’s poorer countries become more economically efficient.
But two EU diplomats from the opposing bloc said their real motivation was to slow down payments to less-capable regions.
Example of RRF
The cash restructuring model was tested in the EU’s post-Covid recovery fund, the Recovery and Resilience Facility (RRF), where payments were linked to judicial and pension reforms among others.
