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“Historic step towards a debt community”
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CDU economic council warns of debt community
The $ 750 billion debt-financed pot, which the 27 member states agreed to in July, is causing great concern among the economic wing of the Union. But so far there has been hardly any resistance even in the Union.
The economic wing of the CDU fears that the EU’s Corona reconstruction fund could become a permanent establishment. There is a risk that countries will spend billions as they see fit. But so far there has been hardly any resistance even in the Union.
reThe rapid implementation of the EU reconstruction fund is by far the most important project of the German Presidency of the Council of the EU. For the economic wing of the Union, however, the debt-financed 750 billion pot, which the 27 member states agreed to in July, is causing great concern. Especially since Federal Finance Minister Olaf Scholz (SPD) does not want to see the decision to take on joint debts in Europe on a large scale for the first time as a one-time step in a serious crisis.
“The development fund could be a historic step towards a debt community,” warns the CDU’s Economic Council in a position paper. In the history of the EU, temporary instruments have been institutionalized time and time again.
This applies both to the European rescue package (ESM) created during the financial crisis and to the ultra-flexible monetary policy of the European Central Bank (ECB). “The EU’s own borrowing capacity is the fund’s real downfall,” says Economic Council Secretary General Wolfgang Steiger. “As soon as the difficult compromise was reached, the first people spoke about a permanent opening – irresponsibly also the Federal Minister of Finance Olaf Scholz.” It is even more urgent now to have a clearly defined exit path to prevent the EU development fund from becoming a permanent establishment, the Union man warns.
The EU wants to raise its own taxes independently
The federal finance minister and SPD chancellor candidate described the decision to jointly assume the debt as “real progress” for Europe that cannot be reversed. Heads of government have also agreed that the EU should in future collect its own taxes, such as a new plastic tax and an EU digital tax; this is also a novelty.
The CDU Economic Council, however, has little hope that the reconstruction fund is the right way to fight the EU’s economic weaknesses. A good half of the funds will go to the federal states in the form of grants and the rest in the form of very long-term loans. “Transfers are not a solution to the structural problems of some southern EU countries,” the position paper says.
The planned financial assistance consolidated the imbalances between North and South rather than eliminating them. “We can only bring crisis countries in the EU to long-term competitiveness through reforms, not through increasing amounts of money that only further solidify inefficient traditional structures,” emphasized Steiger, director of the Economic Council. There is a great danger that some countries will spend the billions of the fund as they see fit.
Unlike Chancellor Angela Merkel (CDU), the heads of government of Austria, the Netherlands, Sweden, Denmark and Finland had called for EU aid to be tied to strict conditions. Italy and Spain, in particular, categorically rejected it. The CDU Economic Council now insists that funds be allocated and effective controls applied in the specific design of the reconstruction fund.
SPD chancellor candidate Scholz plans higher taxes for the wealthy
The crown pandemic caused the collapse of budget revenues in Germany. SPD chancellor candidate Scholz already has an idea to increase state revenue in the event of an electoral victory.
Source: WELT / David Schafbuch
“The Budgetary Control Commission of the EU Parliament is rightly calling for a new and stricter control system for the use of funds,” the document says. Growth and competitiveness must be at the center. “It must be absolutely transparent at all times who receives how much money for which project and what the implementation status is.”
Before the Economic Council, the president of the association of medium and business enterprises of the CDU and CSU (MIT), Carsten Linnemann, had expressed his concern about the new European course and warned against a transfer union.
It is now essential that the funds are used for future real projects with European added value and that strict controls are carried out to ensure that recipient countries meet the conditions of financial resources, said the group’s deputy director at the Handelsblatt.
Almost no resistance expected from parliament
In general, however, the party’s internal critics are remarkably cautious. In view of the significantly improved poll values for the Union parties and for the Chancellor herself under the Crown, there is little resistance to the initiative initiated by Germany and France on the EU debt. The German parliament is not to be expected to oppose the plan.
Regardless, SPD approval is considered secure. And even before the EU summit in July, the Union parliamentary group had approved the construction fund with an overwhelming majority, including the first chance for the EU Commission to borrow 750 billion euros.
