Governing the European Union's recovery and resilience facility: National ownership and performance-based financing in theory and practice

The Recovery and Resilience Facility (RRF) adopted in response to the COVID-19 pandemic marks an important departure in European Union (EU) governance, as it introduces an innovative “demand-driven, performance-based” model aimed at overcoming the limitations of past policies seeking to promote national reforms. In this study, we set out the theoretical assumptions underlying the RRF governance model, and assess its practical effectiveness and legitimacy by analyzing the drafting, implementation, and monitoring of National Recovery and Resilience Plans in eight member states. The study concludes by assessing the strengths and weaknesses of the RRF's governance model, relating them to theoretical expectations derived from previous international experience with similar approaches elsewhere, and considers the implications for future EU policy. Our core argument is that while the RRF's governance design has reinforced national ownership and commitment to reform and investment objectives, its performance-based financing system leads to a mechanical focus on formal verification of predetermined milestones and targets, with negative consequences for both effectiveness and legitimacy. Addressing these problems would require a redesign of the RRF's complete contracting approach, giving member states greater flexibility on the means for achieving agreed commitments, as well as for revising them, not only in response to unanticipated changes in objective circumstances, but also to lessons learned during the implementation process.