BRUSSELS: Hungarian Prime Minister Viktor Orban is welcomed by European Commission President Ursula von der Leyen in the Berlaymont building at the EU headquarters on Friday. - AFP

BRUSSELS: Negotiations were difficult and the plan got off to a slow start, but Europe's huge post-coronavirus recovery fund may make its first payments in July. To Brussels' relief, two important obstacles in the path of the 672-billion-euro ($812 billion) package of grants and loans were passed this week. Germany's constitutional court rejected a bid to block the deal's ratification and Portugal became the first EU member to submit its spending plan.

"It was a very good week," a senior EU official told AFP. A dozen more members - including big player France - are due to follow suit next week, handing over what officials warn are on average 50,000-page documents. This will allow the European Commission to spend two months studying what will eventually be 27 national plans for investment and reform.

If they pass muster the member states will take up to four weeks to give the go ahead and then, one official said, "we'll see money start to flow in July". This will be a year on from the European Union's historic decision to pool debt to fund the recovery package. And what once seemed like a hugely ambitious exercise has been dwarfed by the United States' adoption of a $1.9 trillion infrastructure plan.

The US has also surged ahead with coronavirus vaccinations, meaning its economy will emerge from lockdowns quicker than those in Europe. EU chiefs remain upbeat and optimistic. "Our objective is to approve all the plans by the summer," European Commission president Ursula von der Leyen said.

Here comes the cavalry

But some national capitals have been champing at the bit. "I see that the American cavalry is arriving on time," French Finance Minister Bruno Le Maire said earlier this month. "I wish the European cavalry would also arrive on time." As late as Thursday, European Central Bank chief Christine Lagarde stressed the "urgency" of getting on with Europe's stimulus.

Spain and Italy will see the biggest injections of funds if their roughly 70-billion-euro plans are approved, followed by France at 40 billion. In recent weeks, behind the scenes, European Commission officials have been in difficult discussions with national governments on the criteria that spending plans must meet.

But, with the arrival of Portugal's dossier, they see political road blocks beginning to collapse. In terms of investment spending, each plan must assign at least 37 percent to measures that better the environment or fight climate change. Another 20 percent is supposed to finance the transition to a more digital economy.

Carrot and stick

The hope is that as European output picks up after a year of COVID and lockdown woes, it will herald a rash of spending in insulating buildings, railway transport, electric vehicle charging points and high-speed Internet. But, in a stick to accompany the carrot, the European Commission is once again looking to impose structural economic reforms on member states.

Some of these will prove politically difficult in some member states. France is supposed to reform its unemployment insurance, Spain its labor code and Italy to further reduce public spending. Talks with member states are still ongoing, and they seem particularly tough in the case of Hungary. Prime Minister Viktor Orban was in Brussels on Friday for closed door talks with von der Leyen.

Last year, Budapest threatened to block the whole package if payments from the fund were made conditional on member states following the rule of EU law. Nevertheless, Brussels officials say the recovery plans must uphold the law and will be examined for loopholes for corruption. Orban needs the seven billion euros that would be allocated to Hungary, but if he decides not to back down he has one trump card. Hungary is one of nine EU member states that have yet to ratify the plan. No payments will be possible until they all have. - AFP