Dr René Repasi publishes article on the SURE instrument

The SURE instrument is based on Council Regulation (EU) 2020/672 of 19 May 2020 on the establishment of a European instrument for temporary support to mitigate unemployment risks in an emergency (SURE) following the COVID-19 outbreak [2020] OJ L159/1. Dr Repasi argues that, “This instrument … is ground-breaking from a political and legal perspective, despite its rather minimalistic economic impact” (p. 9). “Its ground-breaking character becomes visible once we ignore the concrete numbers and look at the legal design of SURE, especially if we compare it to the instruments that the EU came up with during the last economic crisis. SURE overcomes the need for ‘strict policy conditionality’ in return for EU financial assistance and it establishes a refinancing model of loans based on EU debt, which are guaranteed by the Member States” (p. 9). In what may be termed as “financial assistance in return for earmarking”, “the one who pays defines the actual use of the payment” (p. 11).

Dr Repasi further argues that: “Without calling them ‘Coronabonds’ or even ‘Eurobonds’, SURE establishes a refinancing model for the loans that it grants based on own EU debt and thus makes use of the EU’s excellent rating on the financial markets” (p. 11). As explained by Dr Repasi, “This refinancing model is nothing new in EU law” (pp. 11-12) and is in line with the EU’s budget rules (p. 12).

Dr Repasi also highlights some shortcomings regarding the SURE instrument. For one, “the choice of the legal basis won’t allow for extending SURE into these periods or for transforming it into an Unemployment Reinsurance Scheme” (p. 12). Building on his earlier work on a European Unemployment Benefit Scheme, he argues that Article 175(3) TFEU could have also been used. “The advantage of this choice of legal basis would not only have been to make the objective of social cohesion more visible and to allow for extending SURE into periods where there are no more ‘severe difficulties’, but it would have included the European Parliament in the legislative procedure and, by doing that, enhanced the democratic legitimacy of the instrument” (p. 13). “Only in its capacity as the EU’s budgetary authority can [the European Parliament] check on the use of the EU’s financial means by the European Commission” (p. 13). “Whilst this is already progress compared to the special purpose vehicles that were constructed outside the EU legal framework during the last economic crisis, this minimalistic involvement of the European Parliament clearly constitutes a shortcoming of SURE” (p. 13).

Overall, “many elements that SURE already embodies can be found in the design of the Recovery Plan” (p. 14). This means, according to Dr Repasi, that “SURE could become victim of its success” (p. 14). “Its design may have paved the way for an ambitious recovery plan, but the choice for grants instead of loans [in the Recovery Plan] will make SURE economically an unattractive instrument that will hardly be used” (p. 14).