750 Billion Gambling: A Different Community Behind The Door, But Will Europe Outperform It?

The EC proposed $ 750 billion European Recovery Fund on Wednesday. Jame 500 billion. € 250 billion in grants and € 250 billion in EUR – loans. Lithuania is offered $ 3.9 billion. € 2.4 billion in grants and € 2.4 billion in euro loans

The plan, it is true, has not yet been approved by the leaders and parliaments of the 27 EU countries. But if we are successful, we should be talking about the first time that the Community has lent jointly, that is, on behalf of the bloc.

Der Leyen says that the measures being taken are exceptional, because the situation is not uncommon either; after all, it is very rare for pandemics to stop, which will almost entirely halt economic activity across Europe.

However, as many observers have pointed out in The New York Times, the EU believes that the adoption of such a fund would be an important step towards a large and common Community budget. In addition, said budget would be collected through general taxes.

There is no shortage of ambiguities.

For these reasons alone, the coming weeks of negotiations have already become a historic moment for the EU project. If the von der Leyen plan, which was largely initiated by members of the bloc Germany and France, is approved, speaking of Brussels as the true center of power in the EU will only intensify this time.

But the voices of critics are likely to grow stronger as well. Critics of the plan, leaders of Austria, Denmark, the Netherlands and Sweden, basically say that von der Leyen can say whatever he wants. What they cannot do is use their taxpayers’ money.

Perhaps that is why Mr von der Leyen’s appearance in the empty European Parliament and his press conference was the main focus of the so-called “Quartet”. It is true that ambiguities are inevitable.

If the von der Leyen plan, which was largely initiated by members of the bloc Germany and France, is approved, there is talk of Brussels, since this time the true center of power in the EU will only intensify.

For example, the President of the EC, who also wants a quick consensus on 1.1 trillion. He assured that the dramatic situation required an extraordinary response. But he added here that the Community does not change the policy for managing the contributions of the Member States to the budget.

Von der Leyen calls his plan for the next generation of the EU revolutionary, but he believes that we cannot speak of a new reality. The Commission is proposing aid to companies and industry, such as the aviation sector, but also a new tax for large companies.

The plan is presented as optimal: 500 billion. € 250 billion in grants. However, it is also recognized here that these proportions and the size of the fund may generally change.

The debt as a whole would be guaranteed by the EU as a whole, from the budget constituted by the contributions of the Member States or by the new common taxes on the countries. The debt would be paid in 2027-2058. But Mr von der Leyen’s plan emphasizes that this is not mutualisation of debt.

“It is a completely new concept and a new step forward. The crisis is so great that we have to take unusual measures,” said von der Leyen.

But then he explained: “This plan will allow the EU member states to contribute to the next budget in the same way as now. I want to make it clear that this is an exception, an exception. “

The proposal is not final.

It is true that if this message were heard by those to whom it was sent, it was hit. Austrian Chancellor Sebastian Kurz seems quite satisfied.

“We, not only me, but also the Netherlands, Sweden and Denmark, like the fact that there is a time limit and that the fund is a unique emergency, not a first step towards a debt union” .

Since many in Europe want this debt union, it is important for us that it be consecrated in writing once and for all, “Kurzas told Politico.

Clearly, Mr der der Leyen and his team rely heavily on the main proponents of the plan, German Chancellor Angela Merkel and French President Emmanuel Macron.

The latter are not the best of friends, but at the same time their political muscles are really powerful, and it was these leaders who together proposed last week that the EU borrow half a trillion euros and distribute that amount in subsidies to the countries most affected by the pandemic.

U. von der Leyen left such amount for subsidies and added 250 billion. Loans in euros, although it is recognized that the amounts are subject to change.

The compromise proposal, of course, attracts Italy and Spain, which have the strongest financial support. Italian Minister for European Affairs Enzo Amendola has expressed his satisfaction with the EC proposal: “This is a solid basis for a successful conclusion of the negotiations.”

U. von der Leyen: how many loans will there be? How many subsidies will there be? Or will it be just donations or just loans? We will have to talk about that, and it is good that we start looking for a solution. Concepts change in any negotiation.

Furthermore, it appears that a bridge between North and South is being built at the beginning of the negotiations. Dutch Prime Minister Mark Rutte said he had spoken to Italian Prime Minister Giuseppe Conte and praised Rome’s efforts to stop the spread of the coronavirus.

Mr von der Leyen, it is true, is already convincing that the EU Member States agree with the general principles of the future fund. The devil, on the other hand, really resides in the details, and these are very important.

“It is acceptable for everyone to borrow in capital markets and transfer money through the European budget. Size, loans and subsidies are discussed.

How many loans will there be? How many subsidies will there be? Or maybe it just will subsidies or just loans? We will have to talk about that, and it is good that we start looking for a solution. The concepts change in any negotiation, “argued the president of the European Commission.

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Charles Michel, President of the European Council (EC), is already working to convene the leaders of the 27 countries and verify their reactions to the EC proposal, both in the coronavirus fund and in the EU budget for 2021- 2027.

The EVS meeting is already waiting on June 19. EU leaders are likely to come face to face for the first time since March, when a pandemic struck the continent.

Although Merkel has already stated that an agreement is unlikely to be successful, Michel is hopeful: “Every effort should be made to reach an agreement before the summer holidays. Our people and companies have been hit hard, they need urgent help. “

SVE representatives say they are analyzing the EC proposal on the Recovery Fund and the budget. We want to find out what these ideas would mean for each of the 27 members of the block.

Ch.Michel: “We need to do everything possible to reach an agreement before the summer holidays. Our people and companies have been hit hard, they need urgent help. “

“We need to ensure a fair distribution of aid,” said an SVE official, Politico, noting that coronavir had affected not only Spain and Italy, but the entire continent. – We cannot say that there is Italy, Spain, and the point of everything.

This is also a psychological problem. We all saw how many people died. These are the emotions. You won’t avoid them. “

Rome would receive almost € 82 billion from the EC. and almost 91 billion euros in subsidies. Euro loan Madrid claims more than $ 77 billion. euros thank you and 63 billion. loans in euros

Representatives from both EVS and the 27 countries will surely want to know how the Commission has specifically calculated how much support to provide to each country. Also, are there very significant crossings with other EU programs to accommodate new spending?

Who will pay for everything in the end?

For the time being, the programs that Mr. van der Leyen has called almost sacred will likely receive less budget funding than previously proposed. Both the Erasmus student exchange program and many security and defense initiatives would be affected.

For example, the Cohesion Funds, designed to reduce regional development disparities in the EU, would receive € 323 billion in 2021-2027. less than € 330 billion. amount proposed in 2018. It is true that it is proposed to complement the financing by 50 billion. EUR of borrowed funds.

In line with the same principle, the Commission proposes to reduce the allocation for the Horizon Europe research and innovation program, which is planned to add € 13.5 billion. borrowed in euros.

The EC emphasizes that all the imaginable debts necessary to establish a Recovery Fund in theory can be paid generating new tax revenues.

Although national capitals have long opposed this accumulation of new “own resources”, Mr der Leyen reiterates that the alternative of higher national contributions to the EU budget or future spending cuts would be more painful.

What is being considered? The digital tax, as well as the cross-border carbon tax, also aims to expand the EU Emissions Trading Plan by increasing taxes on aviation and shipping. The possibility of a “big business” tax has already been mentioned.

Kurzas: “The interest groups are very different: the southern countries, which always want more, Eastern Europe, which does not want all the money to flow south, and, of course, the donor countries, which have to pay for all”.

Another discount for the Quartet is the withdrawal of plans to abandon so-called rebates, which allow countries that contribute more than they receive from the EU budget to withdraw part of their funding.

This is why the Netherlands may not object very loudly to the EC proposal. The Rutte government is still opposed to a common community debt, but now it says it wants to find a way for Europe to support itself.

“It just came to our attention then. The Netherlands also wants to help fight the crisis at the European level. We want to strengthen both the Member States and the EU itself. But we support loans and reforms, we do not support mutualization of debt,” said a Dutch diplomat to Politico.

Probably the most accurate description of the situation was S. Kurzas, who stated: “Everyone’s interests must be taken into account. And the interest groups are very different: the southern countries, which always want more, Eastern Europe, which does not want all the money to flow south, and, of course, the donor countries, which have to pay for everything “

This is rare in European politics, but the summer of the Old Continent, or at least its beginning, is very, very interesting.