Petr Dubinsky

EU Approves Czech Recovery Plan

The European Commission today approved the Czech National Recovery Plan, which will open the way for the Czech Republic to 180 billion crowns in subsidies from the European Union’s emergency crisis fund. According to the commission, the plan meets the set ecological or digital criteria, but the Czech authorities will have to avoid a possible conflict of interest of Prime Minister Andrej Babiš so that the country can collect all the money. The first funds could come to Prague in September, if the Czech investment strategy is finally approved by the member states. Today, Babiš discussed the Czech recovery plan in Prague with the head of the EU executive, Ursula von der Leyen.

The fund, for which the EU has taken out an unprecedented joint loan in the financial markets, is intended to help member countries revive the economy affected by the coronavirus pandemic or better prepare it for a possible recurrence. According to Brussels, the Czechia has met the fundamental requirements, according to which the country must allocate at least 37 percent of its share in the fund to projects designed to protect the climate, and a fifth to digitize the economy. According to the commission’s evaluation, the Czech government combined 42 percent of the fund’s resources with the first criterion, and 22 percent with the second.

“This plan will steer the Czechia on the path to recovery and support economic growth at a time when Europe is preparing for ecological and digital transformation,” Valdis Dombrovskis, EC vice president for economics, said in Brussels today. 

According to the commission, the plan includes investments in energy from renewable sources, modernization of district heating distribution networks, replacement of coal-fired boilers and improvement of energy efficiency of buildings. It also includes measures for nature protection and water management, as well as investment in sustainable mobility.

According to the EC’s assessment, additional money will go to digital infrastructure, digitalization of healthcare, justice and building authorities.

However, in order for the Czechia to receive its entire share in the fund, the Czech authorities will have to comply with the criteria set for protecting EU money from conflicts of interest in the coming months, according to the commission. In an audit published this year, the EU executive concluded that the authorities were not resolving a systemic problem with the conflict of interests of Prime Minister Babiš. According to the auditors, it still controls the Agrofert holding, although it has invested it in trust funds. The Commission therefore does not intend to pay subsidies from the Structural Funds to companies in this group. Babiš himself claims that he has no conflict of interest and that he complies with Czech laws.

The Recovery and Resilience Fund, which contains over 700 billion euros (more than 18 trillion crowns), is separate from the Structural Funds, but EU rules also stipulate that Member States must rule out corruption or conflicts of interest in the management of public money.

In accordance with the fund’s rules, the Czech Republic will receive 13 percent of the total 180 billion crowns this year as part of pre-financing, based on the plan approved today, but will have to present compliance with the aforementioned requirements before the next amount is paid.

“We will not pay if this problem is not resolved, and we will also recover the money from the pre-financing,” one of the EU officials told reporters today, according to which the Czech authorities should meet the commission’s demands by the middle of next year at the latest. The country can draw contributions until 2026.

During the negotiations on the plan with the Czech authorities, the Commission was not completely satisfied with meeting the requirement that investments from the fund must not “significantly harm the environment”, for example in construction waste or the use of dirty energy, according to EU officials. According to them, the Czechia finally undertook to ensure this criterion in the rules of tenders for contracts financed from the fund.