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Explained: The hurdles on the EU’s multi-billion recovery road

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Explained: The hurdles on the EU’s multi-billion recovery road

The Recovery and Resilience Facility (RRF) is the biggest EU investment in history, but money from the post-Covid recovery fund is not flowing into the economy as expected.

The facility was seen as a historic step forward for EU economic solidarity, allowing the European Commission to issue joint debt on behalf of member states to revive a pandemic-ridden economy with green and digital investments.

Yet as the halfway mark approaches — payments are to be spread between 2021 and 2026 — just €153.38 billion (21.1%) of the €723.8 billion available to member states in loans and grants have been disbursed. 

Bureaucratic bottlenecks, shifting political priorities and high inflation have been cited as reasons for unforeseen changes to the EU’s post-pandemic ambitions. 

But experts disagree on whether diversions in the spending plan is a lost opportunity or simply good economic sense.

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A challenging timeline

“It’s mathematical. It’s scientific. Some projects won’t be completed by 2026,” said Italy’s European Affairs Minister Raffaele Fitto in March. Italy has been allocated the biggest tranche of the funds at €191.5 billion, equal to 10.79% of its GDP.

While all member states’ spending plans have been endorsed by the Commission, eight are yet to receive payments, including Hungary and Poland whose funds are blocked amid rows with Brussels over democratic reforms. 

Momentum in paying out funds has stalled, despite Commission chief Ursula von der Leyen recently urging countries to “get the money on the ground”. Only €53 billion were disbursed over the past year, compared to more than €100 billion in the previous 12 months.

For some, the lag in payments is natural as countries need breathing space to ensure the money is well spent.

“Spending money is hard. Doing reforms is hard. Doing reforms to qualify for spending money on a fixed clock is really hard. So it is impressive that they are making as much progress as they are,” Erik Jones, Director at the Robert Schuman Centre for Advanced Studies told Euronews.

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“When plans were agreed in 2020, everyone feared a deep and lasting recession and wanted to get the money out of the door quickly,” according to Daniel Gros, Board Member at the Centre for European Policy Studies (CEPS).

“But in the end, the recession was short-lived. It’s better for everybody that we take time to breathe and reassess spending priorities as circumstances change,” he added.

Last week, credit rating agency S&P Global pointed to corruption oversight, EU state aid rules and high inflation as possible reasons for delays, concluding that Spain – whose €69.5 billion allocation is the second-biggest -and Italy might need extra time. 

“The money has to be out the door by the end of 2026. This calendar cannot be shifted. So everyone is working as fast as they can, but the bandwidth simply isn’t there in many cases,” said Jones.

Accumulating too much spending at the last minute could create volatility on the financial markets. While there is officially no flexibility on the 2026 deadline for investments, sources familiar with the issue have revealed discussions on a possible extension are ongoing. 

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A new experiment

The RRF is the first example of performance-based funding, where countries must hit so-called ‘milestones and targets’, including legislative reforms and green investments, to access funds. The most recent data reveals only 11% of milestones and targets have so far been fulfilled across member states.

Experts believe progress in hitting targets will naturally be slower as payments advance. 

“In 2021 and 2022, the speed of disbursements was fast and in line with the planned timeline. We are now entering a more challenging phase where countries must deliver investments,” said Francesco Corti, a research fellow at CEPS.

Last Thursday, Italy managed to unlock a third payment of €18.5 billion after a months-long duel with Brussels over its targets. Rome’s creative attempts to demonstrate an investment in urban forestation by counting the seeds it had procured, rather than the trees planted, were rejected by Brussels.

Both Italy and Spain have allocated a significant portion of funds to constructing new nurseries and primary schools. With public procurement processes requiring months to approve, and construction costs high due to inflation and supply chain disruptions, hitting these investment targets quickly is proving challenging.

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“Investments are facing the double challenge of rising inflation and disrupted supply chains. It is reasonable that member states ask for more flexibility or to modify their plans,” said Corti.

Tracing the money ‘complicated’

Furthermore, understanding to which projects the money flows is complicated, according to Monika Hohlmeier, Chair of the European Parliament’s Budgetary Control Committee. “We want to know how much money has reached the real economy […] We want to see the real figures,” she said in May.

The Commission has committed to publishing the biggest 100 beneficiaries of funds in each member state. But the information available is patchy, with the data currently missing for 16 countries.

“We should strive for greater transparency in spending so that NGOs and journalists can also stand guard over EU taxpayers’ money,” Krzysztof Izdebski of Open Spending EU Coalition said, “without data, it is difficult for them to perform such a role.”

“We have also checked whether countries themselves want to spend the funds transparently. The results are mixed – for example, Lithuania and Bulgaria are doing great, but Slovenia and Romania are reluctant to share this information. We need a more unified approach,” he added.

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The gaps in reporting raise legitimate questions about possible fraud and corruption. The European Court of Auditors (ECA) found “room for improvement” in the Commission’s anti-fraud measures. “The EU executive did not plan to examine how the countries check that RRF-funded investment projects comply with EU and national rules,” a spokesperson said.

“The compliance of the funded projects with such rules is in a way self-policed by the member states,” the spokesperson added, “this is why we warned that this new spending model faces an assurance and accountability gap.”

An unforeseen energy crisis

Countries were recently asked to add so-called ‘REPower EU chapters’ to their recovery plans to fund projects aimed at reducing dependency on Russian energy and accelerating the green transition, with a total of €225 billion available for investments.

Eni, Enel and other state-controlled Italian energy groups are due to benefit from a partial transfer of the RRF funds to the REPower EU scheme, credit rating agency DBRS revealed this week.

According to NGO Climate Action Network (CAN) Europe, this has made a potential €67 billion available for fossil fuel projects, including liquefied natural gas (LNG) and, in the case of Hungary, Czechia and Slovakia, oil infrastructure.

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“We can expect a significant number of LNG and pipeline projects to be included in respective REpower EU chapters,” Olivier Vardakoulias of CAN Europe said.

“This amendment to the RRF regulation constitutes a serious backtracking in the process of progressively excluding fossil fuel projects from the eligibility of EU funds,” he added.

Some experts believe the channelling of funds to more energy projects is necessary.

“The world has changed in a way that could not have been foreseen. We need a second line of energy resources as an insurance policy. We’re better safe than sorry,” said Daniel Gros.

So far, 17 member states have modified their plans, most recently Austria and Belgium. Some countries, such as Czechia, have already been commended for removing controversial investments in oil and gas pipelines from their recovery plans.

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Saudi executions rose sharply in 2024

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Saudi executions rose sharply in 2024
Saudi Arabia executed 330 people this year, the highest number in decades, despite de facto ruler Mohammed bin Salman’s 2022 assertion that the death penalty had been eliminated except for murder cases under his vision for a new open kingdom.
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Israel launches strikes in Yemen on Houthi military targets, IDF says

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Israel launches strikes in Yemen on Houthi military targets, IDF says

The Israeli military claimed responsibility for a series of airstrikes in Yemen on Thursday that hit Sana’a International Airport and other targets in the Houthi-controlled capital.

The Israel Defense Forces said the strikes targeted military infrastructure used by the Houthis to conduct acts of terrorism. 

“The Houthi terrorist regime has repeatedly attacked the State of Israel and its citizens, including in UAV and surface-to-surface missile attacks on Israeli territory,” the IDF said in a statement. 

“The targets that were struck by the IDF include military infrastructure used by the Houthi terrorist regime for its military activities in both the Sana’a International Airport and the Hezyaz and Ras Kanatib power stations. In addition, the IDF struck military infrastructure in the Al-Hudaydah, Salif, and Ras Kanatib ports on the western coast.” 

PROJECTILE FROM YEMEN STRIKES NEAR TEL AVIV, INJURING MORE THAN A DOZEN: OFFICIALS

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Black smoke rises near Sana’a International Airport in Yemen after reported Israeli airstrikes. (Reuters)

The strikes come days after Israel’s defense minister promised retaliation against Houthi leaders for missile strikes launched at Israel from Yemen.

Houthi rebels, who control most of northern Yemen, have fired upon Israel for more than a year to support Hamas terrorists at war with the Jewish State. The Houthis have attempted to enforce an embargo on Israel by launching missiles and drones at cargo vessels crossing the Red Sea – a major shipping lane for international trade. 

US NAVY SHIPS REPEL ATTACK FROM HOUTHIS IN GULF OF ADEN

Oil tanker in the Red Sea

This photo released by the European Union’s Operation Aspides naval force shows the oil tanker Sounion burning in the Red Sea following a series of attacks by Yemen’s Houthi rebels, on Saturday Sept. 14, 2024.  (European Union’s Operation Aspides via AP)

Overall, the Houthis have launched over 200 missiles and 170 drones at Israel since Hamas’s Oct. 7, 2023, massacre of 1,200 people. Since then, the Houthis have also attacked more than six dozen commercial vessels – particularly in the Bab-el-Mandeb, the southern maritime gateway to Egypt’s Suez Canal.

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On Saturday, a projectile launched into Israel from Yemen struck Tel Aviv and caused mild injuries to 16 people, Israeli officials said. The incident was a rare occasion where Israeli defense systems failed to intercept an attack.

NETANYAHU WARNS HOUTHIS AMID CALLS FOR ISREAL TO WIPE OUT TERROR LEADERSHIP AS IT DID WITH NASRALLAH, SINWAR

Israel Katz

Israeli Defense Minister Israel Katz looks on, amid the ongoing conflict in Gaza between Israel and Hamas, in Jerusalem, November 7, 2024.  (REUTERS/Ronen Zvulun)

Israel retaliated by striking multiple targets in areas of Yemen under Houthi control, including power plants in Sana’a. 

Israeli leaders have vowed to eliminate Houthi leadership if the missile and drone attacks do not cease.

On Monday, Israeli Defense Minister Israel Katz said, “We will strike their strategic infrastructure and decapitate their leaders. Just as we did to [former Hamas chief Ismail] Haniyeh, Sinwar and Nasrallah, in Tehran, Gaza and Lebanon – we will do in Hodeidah and Sanaa.” 

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Prime Minister Benjamin Netanyahu has also urged Israelis to be “patient” and suggested that soon the military will ramp up its campaign against the Houthis.

“We will take forceful, determined and sophisticated action. Even if it takes time, the result will be the same,” he said. “Just as we have acted forcefully against the terror arms of Iran’s axis of evil, so too will we act against the Houthis.”

Fox News Digital’s Amelie Botbol contributed to this report. 

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Retraction of US-backed Gaza famine report draws anger, scrutiny

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Retraction of US-backed Gaza famine report draws anger, scrutiny

United States President Joe Biden’s administration is facing criticism after a US-backed report on famine in the Gaza Strip was retracted this week, drawing accusations of political interference and pro-Israel bias.

The report by the Famine Early Warning Systems Network (FEWS NET), which provides information about global food insecurity, had warned that a “famine scenario” was unfolding in northern Gaza during Israel’s war on the territory.

A note on the FEWS NET website, viewed by Al Jazeera on Thursday, said the group’s “December 23 Alert is under further review and is expected to be re-released with updated data and analysis in January”.

The Associated Press news agency, quoting unnamed American officials, said the US asked for the report to be retracted. FEWS NET is funded by the US Agency for International Development (USAID).

USAID did not immediately respond to Al Jazeera’s request for comment on Thursday afternoon.

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Israel’s war in Gaza has killed more than 45,300 Palestinians since early October 2023 and plunged the coastal enclave into a dire humanitarian crisis as access to food, water, medicine and other supplies is severely curtailed.

An Israeli military offensive in the northern part of the territory has drawn particular concern in recent months with experts warning in November of a “strong likelihood” that famine was imminent in the area.

“Starvation, malnutrition, and excess mortality due to malnutrition and disease, are rapidly increasing” in northern Gaza, the Integrated Food Security Phase Classification said in an alert on November 8.

“Famine thresholds may have already been crossed or else will be in the near future,” it said.

The report

The FEWS NET report dated December 23 noted that Israel has maintained a “near-total blockade of humanitarian and commercial food supplies to besieged areas” of northern Gaza for nearly 80 days.

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That includes the Jabalia, Beit Lahiya and Beit Hanoon areas, where rights groups have estimated thousands of Palestinians are trapped.

“Based on the collapse of the food system and worsening access to water, sanitation, and health services in these areas … it is highly likely that the food consumption and acute malnutrition thresholds for Famine (IPC Phase 5) have now been surpassed in North Gaza Governorate,” the FEWS NET report had said.

The network added that without a change to Israeli policy on food supplies entering the area, it expected that two to 15 people would die per day from January to March at least, which would surpass the “famine threshold”.

The report had spurred public criticism from the US ambassador to Israel, Jack Lew, who in a statement on Tuesday said FEWS NET had relied on “outdated and inaccurate” data.

Lew disputed the number of civilians believed to be living in northern Gaza, saying the civilian population was “in the range of 7,000-15,000, not 65,000-75,000 which is the basis of this report”.

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“At a time when inaccurate information is causing confusion and accusations, it is irresponsible to issue a report like this,” he said.

‘Bullying’

But Palestinian rights advocates condemned the ambassador’s remarks. Some accused Lew of appearing to welcome the forced displacement of Palestinians in Gaza.

“To reject a report on starvation in northern Gaza by appearing to boast about the fact that it has been successfully ethnically cleansed of its native population is just the latest example of Biden administration officials supporting, enabling and excusing Israel’s clear and open campaign of genocide in Gaza,” the Council on American-Islamic Relations said in a statement.

The group urged FEWS NET “not to submit to the bullying of genocide supporters”.

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Huwaida Arraf, a prominent Palestinian American human rights lawyer, also criticised Lew for “relying on Israeli sources instead of your own experts”.

“Do you work for Israel or the American people, the overwhelming majority of whom disapprove of US support for this genocide?” she wrote on X.

Polls over the past year have shown a high percentage of Americans are opposed to Israel’s offensive in Gaza and want an end to the war.

A March survey by Gallup found that 55 percent of people in the US disapproved of Israel’s actions in Gaza while a more recent poll by the Pew Research Center, released in October, suggested about three in 10 Americans believed Israel’s military offensive is “going too far”.

While the Biden administration has said it is pushing for a ceasefire in Gaza, it has rebuffed calls to condition US assistance to Israel as a way to bring the war to an end.

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Washington gives its ally at least $3.8bn in military assistance annually, and researchers at Brown University recently estimated that the Biden administration provided an additional $17.9bn to Israel since the start of the Gaza war.

The US is required under its own laws to suspend military assistance to a country if that country restricts the delivery of American-backed humanitarian aid, but Biden’s administration has so far refused to apply that rule to Israel.

“We, at this time, have not made an assessment that the Israelis are in violation of US law,” Department of State spokesperson Vedant Patel told reporters in November despite the reports of “imminent” famine in northern Gaza.

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