Negotiated and negotiable? Contractual governance and the flexibility of the EU’s recovery and resilience facility

This article examines the flexibility of the Recovery and Resilience Facility (RRF). It asks under what conditions modifications to the original National Recovery and Resilience Plans (NRRPs) have been accepted by the European Commission and the Council. In theoretical terms, the article revisits the nature of NRRPs as tools of EU economic governance. By drawing on applications of contracting theory to multi-level governance, it argues that NRRPs are best understood as contracts establishing mutual duties and enforcement mechanisms between the different layers of the EU polity. As with any contract, NRRPs face a trade-off between abiding to the original commitments versus being adaptable to implementation contingencies and exogenous shocks. The article studies how the RRF's performance-based financing system has navigated this trade-off in practice. Based on a dataset that includes all revisions introduced in the 27 NRRPs between 2021 and 2024, the article shows a degree of designed flexibility due to 'objective circumstances' based on Article 21(1) of the RRF Regulation. Yet, the qualitative analysis of these changes unveils a broad interpretation of the latter, which opens the door also to 'emergent flexibility'. Ultimately, contractual governance is a guiding normative aspiration rather than a legal reality.