University of Tartu says EU joint loan is in line with EU treaties

Euros (photo is illustrative).
Euros (photo is illustrative). Source: Siim Lõvi/ERR

Legal analysis conducted by the University of Tartu (TÜ) found that the European Union's proposed €750-billion economic recovery plan is likely to be in line with the union's treaties.

The analysis was commissioned by the Government Office and conducted by lawyer Carri Ginter, associate professor in European law at the University of Tartu.

Ginter told ERR that the purpose of the analysis was to determine whether the EU's recovery plan in its current form is compatible with the EU treaties.

Ginter said: "Essentially, with our analysis, we have come to the conclusion that EU law does not preclude such a solution, that the ways proposed there in which the EU borrows directly for extra-budgetary projects that are further implemented in the member states are, in principle, within the competence of the EU."

A separate issue was whether the member states have given the EU the right to act in this area. According to Ginter, there are such provisions in the treaties.

However, he emphasized that it is important that this solution be temporary. "That the EU will not simply start increasing its income in this way and expanding its competences in this way in the future. With regard to this existing package today, if the member states, the national parliaments, the European Parliament agree, there should be no obstacles."

Ginter added that one of the concerns with the current solution is that the provision on which the recovery plan is based is very general.

He said: "The wording of the provision on which this mechanism is based seems to allow the European Council to adopt measures appropriate to the economic situation. But this provision is so general that member states should definitely specify the limits of the implementation of this provision -- what the council can do, whether it must be temporary, how large it can be, in what situations these measures can be taken."

Ginter added that otherwise, if this provision were to be interpreted broadly, the question could arise that the EU could do anything in the field of economic policy. "It is definitely in the interest of the member states to restrict it in one way or another or to make it clear that it is not a bottomless well for increasing EU competences."

Ginter also pointed out that the current economic recovery solution is different from the previous one.

He said: "Another issue that is interesting is how, from a budgetary point of view, the EU is taking out a loan, but this loan is not reflected in the EU budget, because it is channeled directly into foreign projects. This triangular relationship arises as if a loan is being taken but not received, but these projects receive the loan directly. This is a slightly different solution than previously used."

Ginter added: "But the point is that the EU treaties require that the EU budget be kept in balance and from a budgetary point of view, formally using this solution will keep it in balance."

Ginter emphasized that such a historic step by the EU is very exciting from a legal point of view, but it definitely has its risks. "In particular, there is a risk that the council's power to adopt measures in line with the economic situation must be clearer than the agreement currently says."

He concluded: "It is common for EU law to have a general provision and the European Court of Justice to give it substance, but in this case the content of this provision is currently the subject of a 1973 ruling, meaning it is nearly 50 years old. As someone interested in constitutional law and European law, I would definitely prefer that it be understandable what the council can and must not do. These boundaries clearly do not yet exist today."


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Editor: Kristjan Kallaste

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