May 20, 2020 / 5:02 PM / 16 days ago

Could ratification process be iceberg that sinks EU recovery plan?

BRUSSELS, May 20 (Reuters) - The likely need for all member states to ratify the giant EU coronavirus recovery plan could be its undoing if it runs into choppy domestic political waters in some or all of the 27 parliaments, officials and diplomats said on Wednesday.

Germany and France - the bloc’s two biggest economies - have come together behind the plan to dole out 500 billion euros to states hit hardest by the pandemic.

The rest of the member states are now jockeying to win most benefits for themselves from the fund and the linked joint EU budget for 2021-27. That means the exact details of what they will have to eventually agree on unanimously are not yet clear.

And while some EU decisions are sealed by national governments, the Commission and the European Parliament, others are subject to even more elaborate procedures, including member countries’ national or even regional parliaments.

One envisaged element has already raised red flags: the necessary approval by national parliaments of a planned increase to the EU budget’s “own resources” that would allow the Commission to borrow on the market to finance the fund.

Whether member states can agree how to divvy up the new joint fund has yet to be tested - but the financial lifeboat may run aground before that if domestic political opponents seize on it as way to frustrate fractious coalitions or weak governments around the bloc.

“It’s a dangerous path to take,” said one EU official, stressing that the risk was high that feuds or petty politicking could hijack the process in national parliaments.

“The iceberg that sank the Titanic or Pandora’s box - pick your own metaphor. What is certain is that it’s a highly volatile process and you never know how long it would take, where it would get blocked and why,” another EU official said.

In recent years, one of multiple regional assemblies in Belgium held up the EU’s new trade deal with Canada for months and the bloc’s association deal with Ukraine was under serious threat over the Dutch parliament’s misgivings.

Most notably, the EU’s years-long bid at agreeing its new constitution failed in 2005 after the French and Dutch lawmakers rejected what had previously been cleared by their governments.

As the European Union scrambles to jumpstart its ravaged economy, the executive European Commission will present its blueprint for the Recovery Fund next week. It hopes to start handing out cash this autumn.

Reporting by Gabriela Baczynska; Editing by Alison Williams

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