Explanatory Memorandum to COM(2020)114 - Amendment of Council Regulation (EC) No 2012/2002 in order to provide financial assistance to (candidate) Member States seriously affected by a major public health emergency - Main contents
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| dossier | COM(2020)114 - Amendment of Council Regulation (EC) No 2012/2002 in order to provide financial assistance to (candidate) Member States ... |
|---|---|
| source | COM(2020)114  |
| date | 13-03-2020 |
1. CONTEXT OF THE PROPOSAL
• Reasons for and objectives of the proposal
Since the first cases of COVID-19 contagion, the EU has been working tirelessly to support the Member States and their citizens in addressing the crisis.
The ARGUS crisis coordination mechanism of the Commission has been activated and the Crisis Coordination Committee meets regularly to synergise the action of all the relevant departments and services of the Commission and of the EU agencies. The Commission has also established a coordinating response team at political level, composed of the five commissioners responsible for the most affected policies.
Following the EU leaders' videoconference on the response to the COVID-19 outbreak on 10 March 2020, the Commission will further step up its response to the Coronavirus, or COVID-19 outbreak, on all fronts and coordinate Member State actions. The crisis we face because of Coronavirus has both a very significant human dimension, and a potentially major economic impact. It is therefore essential that the EU and its Member States act decisively and collectively, to contain the spread of the virus and help patients, and to counter the economic fallout.
As part of this joint coordinated response, the EU Solidarity Fund (EUSF) can play an important role in showing EU solidarity to Member States in dealing with the emergency situation.
Responding appropriately at EU level to major public health emergencies such as COVID-19 with the existing instrument is currently impossible.
The objective of the present Regulation is therefore to extend the scope of the EUSF to include major public health emergencies and to define specific operations eligible for financing.
The EUSF was created in 2002 to support EU Member States and accession countries in situations of major disasters caused by natural events such as floods, storms, earthquakes, volcanic eruptions, forest fires or drought. The Fund can be mobilised upon an application from the concerned country if the disaster event has a dimension justifying intervention at European level. Its functioning is a tangible expression of a genuine EU solidarity, whereby Member States agree to support each other by making additional financial resources available through the EU budget. The current EUSF is however strictly limited to natural disasters causing physical damage such as floods, storms, earthquakes and similar. It may award financial assistance to eligible States totalling up to EUR 500 million in 2011 prices per year.
• Consistency with existing policy provisions in the policy area
The present proposal aims at modifying Council Regulation (EC) No 2012/2002 of 11 November 2002 establishing the European Union Solidarity Fund (hereafter: “Regulation (EC) No 2012/2002”) in order to extend its scope to cover major public health emergencies.
The geographical scope remains unchanged: it is limited to Member States of and countries negotiating their accession to the EU. The thematic scope, however, is enlarged to cover major crisis situations resulting from public health threats.
Advance payments were introduced with the revision of the EUSF Regulation in 2014 and became effective from 2015. The main justification for their introduction was that the procedure necessary to mobilise the EUSF and pay out the full assistance is too lengthy (typically up to one year) and that the serious crisis situation demanded a quicker response. It was also considered that the long delays in providing assistance were bad for the image of the EU.
The level of advances was set at 10% of the expected EUSF contribution, limited to a maximum of EUR 30 million. It turned out that this level was not satisfactory. In case of smaller disasters where the EUSF contribution amounts to a few million euros, the advance is not much more than some hundred thousand euros which hardly make a difference. In the event of very big disasters such as the Abruzzo earthquake with EUR 22 billion in damage and an EUSF contribution of EUR 1.2 billion, an advance of no more than EUR 30 million is totally inadequate. In both scenarios the advance payment is disproportionate to its effects on the ground. The recent ex-post evaluation of the EUSF (2002-2017) confirms this analysis.
The Commission therefore proposes to raise the level of advance payments for individual disasters of all categories to 25% of the expected EUSF contribution, limited to a maximum of EUR 100 million.
The Commission also proposes to increase the total level of appropriations for EUSF advances in the annual budget from EUR 50 million to EUR 100 million.
Mobilisation of the Fund, as under the current procedure, would be possible only upon request of an eligible State. Following the Commission's assessment and proposal to the budget authority of an amount of financial assistance to be awarded, the latter adopts a corresponding supplementary budget. The Commission will then adopt an implementing decision, leading to the payment for the EUSF contribution.
Eligible operations remain limited to public emergency operations. They are extended to include assistance to the population in case of health crises, including medical, and measures to contain the further spreading of an infectious disease.
• Consistency with other Union policies
The proposal is part of the measures in response to the current COVID-19 pandemic. It builds on an existing policy instrument. By enlarging the scope of the current EUSF, it closes a gap in current legislation and allows for comprehensive Union action in response to major public health emergencies. Consistency with other Union policies, in particular with cohesion policy, is ensured by a number of legislative provisions which, among others, exclude double financing and require respect for public procurement rules and the principle of sound financial management.
2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY
• Legal basis
As this is a modification of the existing Regulation, it follows the provisions that are the legal basis for Regulation (EC) No 2012/2002, i.e. Article 175 of the Treaty on the Functioning of the European Union (TFEU) and Article 212 TFEU as regards countries currently negotiating their accession to the EU.
• Subsidiarity (for non-exclusive competence)
The proposal aims to extend the scope of the EUSF in order to show European solidarity with the Member States by providing assistance from the Fund to assist the population affected, contribute to a rapid return to normal living conditions in the affected regions and to contain the spreading of infectious diseases.
The EUSF is based on the subsidiarity principle. This means that the EU should intervene only in cases where a Member State is deemed no longer to be able to cope with a crisis alone and requires assistance. The legislator considered that, for natural disasters, such a situation is present when the total direct damage exceeds a certain threshold. Economic follow-on damage is not included as it is considered too complex to determine in a quick, reliable and comparable way. The threshold for natural disasters was therefore set at direct damage exceeding 0.6% of gross national income (GNI) or EUR 3 billion (in 2011 prices), whereby the lower amount applies. This double criterion was chosen because a single fixed amount would not reflect the big differences in economic strength (and therefore budgetary response capacities) of the Member States and lead to great injustices and unequal treatment of Member States. A single percentage rate would lead to either extremely low amounts for the smaller Member States or unattainably high thresholds for the biggest economies.
In the case of major health emergencies, it is hardly possible to estimate the direct damage. The same approach as for natural disasters is therefore not possible. Instead, the Commission proposes to take the financial burden on Member States’ budgets in order to face the additional needs. This corresponds largely to the public share of direct damage eligible for funding (such as the cost of recovery of public infrastructure, assistance to the population, rescue services etc.) in the case of natural disasters. This eligible public share of total damage varies greatly depending on the disaster and the country affected. On average, it is around 50% of total damage.
The Commission is therefore proposing to maintain the principles on which access to the EUSF is based. Accordingly, the lower of 0.3% of GNI or EUR 1.5 billion in 2011 prices, i.e. half of that applicable to natural disasters, are defined as the minimum level of public expenditure related to the public financial burden inflicted on the eligible State for emergency response measures.
·Proportionality principle
The proposal respects the proportionality principle. It does not go beyond what is necessary to achieve the objectives already laid down in the current instrument.
·Choice of instruments
It is proposed to modify the existing Regulation (EC) No 2012/2002 to use the established procedures and practices to prepare and assess the applications for assistance and to implement and report the aid.
3. RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS
• Ex-post evaluations/fitness checks of existing legislation
The Ex Post Evaluation 2002-2017 concluded that the Fund is a valuable instrument in the EU toolkit for interventions in disaster situations, bringing EU added value to the post-disaster response in Member States and accession countries. The evaluation also called for further consideration to be given to policy actions that increase the potential for the Fund to intervene.
·Stakeholder consultations
Due to the urgency to prepare the proposal so that it can be adopted on time by the co-legislators, a stakeholder consultation could not be carried out.
·• Impact assessment
Due to the urgent nature of the proposal, no impact assessment was carried out.
4. BUDGETARY IMPLICATIONS
The proposal remains consistent with the existing Solidarity Fund by providing financial assistance for immediate assistance after a request from a Member State or candidate country.
The Commission therefore proposes to raise the level of advance payments for individual disasters of all categories to 25% of the expected EUSF contribution, limited to a maximum of EUR 100 million.
The Commission also proposes to increase the total level of appropriations for EUSF advances in the annual budget from EUR 50 million to EUR 100 million. In order to ensure the timely availability of resources where necessary, the Commission will propose to enter additional appropriations for a maximum of EUR 50 million in the budget for 2020.
The financial envelope foreseen for the Fund also follows the existing Solidarity Fund, with an annual amount of EUR 500 million (2011 prices). In each case, the amount of assistance considered necessary is mobilised through an amending budget. As at present, on 1 October each year, at least one-quarter of this annual amount will remain available in order to cover needs which could arise until the end of the year.
5. OTHER ELEMENTS
• Implementation plans and monitoring, evaluation and reporting arrangements
Maximum transparency and proper monitoring of the use of the EU financial resources are required. Reporting obligations for the Member States and the Commission will apply as set out in Regulation (EC) No 2012/2002.