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ANDEurope’s massive financial response to the crown crisis is late. Since Angela Merkel, Emmanuel Macron and the other heads of state and government decided after Easter to establish a reconstruction fund for the European economy, the EU Commission has been working to turn the idea into a concrete program.
The fund is expected to move up to € 1.5 billion according to the Commission’s ideas. But the huge economic stimulus plan is not moving as fast as Commission President Ursula von der Leyen expects.
Heads of government originally expected von der Leyen to present concrete plans to them in early or mid-May at the latest, along with a proposal for a revised long-term EU budget for 2027. The Commission intends to link the two projects .
Seven countries with more than 100 percent debt
However, for next week, there will probably no longer be a concrete plan for the fund. Finally, the Commission vaguely said the details will be presented “in the coming” weeks.
The deeply revised economic forecast for the EU, which predicts the most severe economic recession since the Great Depression a hundred years ago, should strengthen supporters of the fund, which is mainly based in Paris and the capitals of southern Europe. Forecasters have also made clear that the crown recession will economically further tear the north and south of the euro zone.
Of all the highly indebted countries of southern Europe, which have already been through a lot in the euro debt crisis, they should suffer particularly severe losses because their economies are highly dependent on tourism. Economists’ bleak outlook: By year’s end, government debt in seven eurozone countries will amount to more than 100 percent of gross domestic product.
Federal Constitutional Court causes riots
The main reason why rapid growth in debt levels so far has not worried markets is that the European Central Bank (ECB) has promised to buy government bonds from financially troubled countries if necessary in the Covid crisis. 19. Southern European states rely on the effect of this open protective shield.
The ruling of the Federal Constitutional Court in Karlsruhe on Tuesday, which asked ECB monetary politicians to better justify their bond purchases in the future, is cause for concern. Despite the fact that the practical consequences of the sentence may be less, it did create uncertainty, from the perspective of the defenders of the reconstruction fund, a reason to follow the project even more decisively. Meanwhile, the fact that the EU Commission is progressing slowly is due to the widely divergent interests of the member countries.
On the one hand, officials want to meet the expectations of southern European countries that expect support from northern Europe, preferably in the form of transfers that do not have to be repaid.
How should the money flow?
At the same time, Brussels must take seriously the concerns of conservative fiscal countries like Germany and Austria. In the financial aid dispute, they have successfully resisted the communitization of European government debt through corona bonds, but now fear they will take financial risks for the fund that they can barely control.
For example, it is highly controversial where the money for the fund should come from. The mind games of the EU Commission stipulate that countries will pay several hundred billion euros directly to the fund. The Commission plans to borrow the rest of the money in the financial markets. EU states must guarantee the EU Commission a complicated construction for these debts.
It is also delicate how the fund spends billions, for example, according to what criteria the money should be distributed. After all, all countries are experiencing severe economic recessions. Y: How should money flow, as loans to be paid or as transfers from richer countries to countries in crisis?
These questions are quite complicated, especially in times of extremely limited video diplomacy. Now, however, a power struggle is underway in the European Quarter in Brussels to control the fund, which has the potential to further delay the project. The main question is who decides how the billions will be spent.
Manfred Weber threatens to block
The decision by heads of state and government to link the fund to the EU budget, which is administered by the EU Commission, means a tremendous increase in power for von der Leyen, who has been in office for only six months. Its powerful agency is debating that its own officials and officials from national finance ministries must decide on the priorities and payments of the 1.5 trillion fund.
However, these considerations now face opposition from the top of the European Parliament. “The reconstruction fund means a considerable amount of European taxpayer money, so you must also be able to have an opinion on how the money is used, and for that we need democratic control,” said Manfred Weber, president of the conservative PPE group in the Union. European. Parliament, WELT AM SONNTAG. It is completely unacceptable for EU officials and national officials to decide where billions and billions of euros will go. “Only the European Parliament is directly democratically legitimized at the EU level,” Weber said.
Parliamentarians will debate the fund next week. Then they should also officially register their opinion in the trillion funds. Weber, who represents the largest parliamentary group, sends a warning to Leyen: “The European Parliament must help decide how the money from the reconstruction fund is spent,” he warns. Otherwise, the approval of the long-term EU budget and the reconstruction fund will be denied.
The 1,500 million euros are far from being spent.
This text is from WELT AM SONNTAG. We will be happy to deliver them to your home on a regular basis.
Unconstitutional European Central Bank bond purchase program
The Federal Constitutional Court has granted several constitutional complaints against a controversial bond purchase program by the European Central Bank. The German highest court ruled that the ECB’s decisions on the program were contrary to jurisdiction.
Source: WELT / Laura Fritsch
