THE STATE OF THE EUROPEAN UNION REPORT. Europe in a period of transition

THE STATE OF THE EUROPEAN UNION 90 complying with the established financial path, yet many of the actions, particularly those that involve a structural change, are long-term projects whose consequences will materialise in the coming years. There is, then, a lack of a more detailed assessment of the unwanted impacts and risks of the proposed investments and the possibility of establishing compensatory mechanisms, guaranteeing a just transition towards a new model while addressing one of the priorities of the plans, which is to guarantee social and territorial cohesion. The green transition is a clear example of this issue. The struggle against climate change will incur significant adjustment costs in the medium term; what’s more, they will not impact either the economies or the societies of the different Member States in a uniform manner. The measures undertaken to secure the green transition have triggered certain social rejection, as people are only aware of the costs they generate, while a large part of society has yet to see the benefits of decarbonisation. The yellow vest protests in France in 2018 over the in- crease in taxes on fuel or the discontent that electricity price rises have aroused in Spain, chiefly because of the increase in the cost of CO2 emissions, are examples of that. However, a rapid digital transformation, another of the plan’s core vectors, on which the starting point of the different Member States is very disparate, may also cause exclusion because of poorer adaption of a certain part of the population for socioeconomic reasons, or widen breaches between rural and urban territories, adding an extra difficulty when it comes to the recovery favouring intracommunity convergence. Consequently, both the green and digital transitions will require very different efforts and sacrifices from the citizens and companies of the various Member States. However, the two transformations are also systemic and extend beyond the Union’s borders. This may become an area of geopolitical tension on which there may not be a unanimous position among the community partners when it comes to striking agreements and forming alli- ances on trade, industry, or technology. This could give rise to clashes between them over embarking on those transformation, hindering the decision-making process still further when decisions are already increasingly being made at intergovernmental level. Despite these weaknesses and shortcomings, the Commission has estimated that if all the grants and half of the loans are spent, the impact on GDP growth in the short term will be 2% thanks to the boost to aggregate demand and the carry-over effect on private investment, and 1% in the long term thanks to the increase in pro- ductivity and resilience to future crises as a result of the investments made (European Commission, 2021b). How- ever, this impact on the European Union as a whole is based on the aggregate impact on all the Member States and not explicitly with action on a community scale that has a direct impact on the Union. Each Member State has devised its plan from an internal perspective, without considering the need to promote and strengthen economic, social, and territo- rial cohesion within the Union. Yet the fact that the RRP is the result of an agreement among the Member States and has a European dimension should ensure this pos- itive impact on an EU scale that, moreover, does not appear in any of the plans submitted. In this respect, the Commission guidance could have also explicitly includ- ed boosting convergence among the Member States as a priority goal, particularly in view of the deterioration observed in recent years. This is precisely the main weakness of the Recovery and Resilience Facility architecture, which does not pro- vide for goals or pursue a direct impact on the European Union, only indirectly as a result of the impact achieved in each Member State. Convergence is one of the purposes of the process of European integration and should be rec- ognised explicitly in this new instrument, particularly if, as some are suggesting, it could be the embryo of a more permanent instrument. Greater convergence among the Member States benefits the Union as a whole and puts it in a better position to face the challenges of the future. That is the goal of the resilience that the recovery plan also seeks: Greater convergence underpins the goal of cohesion among the economies and societies of the EU.