Poland is set to be the third largest beneficiary of the European Commission’s newly proposed recovery fund to cushion the economic fallout caused by the coronavirus crisis. With €64 billion set aside for Poland, only Spain and Italy are due to receive more.
Alongside the €750 billion relief fund, the commission also unveiled its proposal for the EU’s next seven-year, €1.1 trillion budget, or multiannual financial framework (MFF). And this also looks generous for Poland, both in terms of how it will be collected and how it will be shared out.
However, negotiations are likely to continue until at least mid-June, and questions of conditionality – including proposals to tie funds to rule-of-law compliance, which Poland strongly opposes – are still on the table.
Negocjacje jeszcze trwają, ale trzeba przyznać, że to naprawdę dobra pozycja wyjściowa w wyścigu o nowe środki na odbudowę gospodarczą UE. Docelowo 38 mld € bezzwrotne, 25 mld € w instrumentach pożyczkowych. https://t.co/h7xXqvXPmx pic.twitter.com/HyLJD2j6ko
— Marcin Makowski (@makowski_m) May 28, 2020
Warsaw welcomed the generous financial package. Speaking at a press conference after the announcement, Polish prime minister Mateusz Morawiecki said that the plan was a “very good starting point”. He added that Poland’s “demands were taken into account by partners in western Europe” and its voice “heard and valued”.
Initial proposals – both last week’s Franco-German proposal for a €500 billion recovery fund, as well as the counter-proposal by Austria, Denmark, the Netherlands, and Sweden (the so-called “Frugal Four”) – had been less generous to Poland.
Standing alongside the prime minister, President Andrzej Duda also praised the proposals, saying that they can “make Europe great again, a key global player”. But Europe also needs to “reinvent itself”, said Duda, “attracting back those industries that have been outsourced abroad, sometimes very far away”.
“The commission’s proposal is the most beneficial for Poland, in every aspect,” Renata Mieńkowska-Norkiene, a lecturer in European politics at the University of Warsaw, tells Notes from Poland.
She explains that, for one, more funds will be allocated to policy areas important to Poland, including a €55 billion boost to cohesion and €23 to agriculture.
Morawiecki noted that he had sent a letter to other European leaders asking for increased spending on agriculture, adding that rural Poland “cares for Polish food and Polish sovereignty in that sphere”.
Second, more funds will also be directed towards Horizon Europe, the EU’s research and innovation programme, to drive more studies into healthcare, green technologies and digitalisation. “This could also stimulate the Polish economy to be restructured, becoming more digital and research-driven,” says Mieńkowska-Norkiene.
On top of the EU’s usual sources of income, the commission has proposed imposing new levies, including a tax on large corporations. “This is an acknowledgement of the demands of smaller states in Central and Eastern Europe, who are usually not home to these large corporations,” according to Mieńkowska-Norkiene.
At Wednesday’s conference, Morawiecki explained that Poland has agreed “a common line” in negotiations with the other Visegrad countries – Czech Republic, Slovakia and Hungary – and “we present it at all our meetings”.
There are aspects of the budget that the Polish government is concerned about, however, including the fact that it will be funded in part by emissions taxes. Speaking alongside Morawiecki, Konrad Szymański, the minister for EU affairs, said that “Poland has opposed and still opposes a climate tax, but has constructively offered alternative solutions”.
Poland was last year the only EU member state not to commit to the EU’s goal of reaching climate neutrality by 2050.
Poland has also expressed opposition to suggestions that funds could be tied to rule-of-law compliance, an area where Warsaw has been in conflict with Brussels.
Foreign minister Jacek Czaputowicz says that it would be impossible to establish “objective criteria” for such a mechanism, meaning that it may be used as a “political instrument” to “punish states”, reports RFM FM.
According to Mieńkowska-Norkiene, the likely outcome is that “the commission may get around this by making [conditionality] vague and unthreatening, and will later clarify the points in a way which will bring discipline.”
It is also possible – although less likely – that the commission will dictate stricter conditions which could adversely affect negotiations of the budget, or abandon the idea for the sake of reaching an agreement, she adds.
The upcoming summit meeting will take place on 19 June, and leaders are bracing themselves for a follow-up in early July, reports the FT. However, Morawiecki is more bullish, saying that the negotiations might even be concluded before the summit date.
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