European Union challenges coronary economic crisis

The EU marathon summit, which began on Friday, managed to make a challenging decision against the economic crisis caused by the coronary pandemic. Compromise achieved. The largest support package of 1.8 billion euros is made available.

At this EU marathon summit, where the agenda was the biggest event that has shocked the EU and not only, but the entire globe, the economic crisis, the result of COVID-19's pandemic, could not happen otherwise. The coronary's economic crisis continued its aggression to challenge Europe, while on the table of this summit, in five days continued consultations, efforts, debates to reach the consensus of adopting the largest support package in EU history, through reaching an agreement regarding the future budget (2021-2027) and the Regeneration Fund (202123). That was the challenge. And it wasn't easy. But why?

Since the debt crisis involving southern European countries beginning in 2008 and on, clashes between two groups of states that support two different approaches (although not diametrically opposed) for the way it should be expelled from the crisis have appeared and argued over and over again. At this summit, they were marked prominently.

And, apparently, neither the extraordinary situation caused by the pandemic we're experiencing did not hide “differences in thought and strategy to get out of this current wave of crises, especially this present one. Five days of difficult negotiations, which highlighted major differences in thought, visions and strategies among member states. Five days, which were accompanied by tension in the negotiating halls and offices, but certainly with an justified anxiety on the part of European citizens (but not only) who see their daily difficulties (in this pandemic period) and their future becoming increasingly uncertain. During these five days, EU leaders discussed and had in their hands not only the present of their societies but also the future of the European Union itself. This, because the crisis in which the EU (but also the rest of the world) is extraordinary and such should be measures that must be taken.

To make a little clearer to the political landscape, the dynamics and the core of the opposing positions of the EU countries, we can simply say that the southern countries of Europe (which sought more support for their economies hit more heavily by the pandemic and the economic crisis in the form of grants uniquely austerity measures) would have to reach compromise with North countries, which are noted for a fiscal conservativeism and for their insistence on accompanying any economic support with a strict control and austerity measures that my Greece is reminded of. It seems that there was also a third grouping of Eastern European countries (resented by government with conservative and nationalist approaches), which this time sought to boost their importance, serving as a bridge between the opposing positions that support the aforementioned groups.

This whole picture of the interests of member states added to the interests of the European Union itself, represented by the main European institutions like the Commission, but based on the experiences of past years, it seems that even this time they had few, if not very little, opportunities to balance the two levels of interest, state and European.

A difficult rebus to resolve and a situation, which really required negotiating skill, visionary politics and not the service of short-term political interests and certainly the will to make concessions.

Chancellor Merkel, in her statements before the summit's start, appears to have summed up in some brief phrases all the difficulty of reaching an agreement, saying the differences are so large that no easy deal could be predicted. The French president appeared to be thinking the same about the difficulty of reaching the agreement, despite his efforts in his statements to stress the need for more optimism and solidarity from member states. In spite of his lactic style, however, it seems that even President Macron was not so optimistic about finding a compromise among member states. On the other hand, the Dutch prime minister of the main country that clearly demanded that any aid package be accompanied by deep reforms in the employment market as well as in pension systems, as well as with strict control, indicated that he was not optimistic that a compromise would be reached between member states, however, as well as to leave a hint of hope, said that “is immediately unknown to<18x1>.

The first obstacle seemed to be the final sum of the recovery plan. And the budget limit for 2021-27. And, of course, it was also the barrier between grants and loans.

Countries such as Holland, Austria, Denmark, Sweden and up to some extent Finland also tried to reduce the budget, as well as change the analogy between grants and loans, preferring the latter. These countries lobbied hard for the association of any aid package and any form of assistance with strict austerity measures and deep reform of the labour market, as well as pension systems of countries that will need assistance.

On the other hand, South countries, with the leadings of Italy and Spain, which as the most beneficial of the aid demanded that no assistance be accompanied by austerity measures, since the example of Greece and form, content and the way austerity measures were imposed, is a scenario that no country and no government would gladly choose.

Another interesting fact is that for the first time in the history of the European Union was the provision of funds from the budget to respecting the rule of law. This led Eastern European countries, such as Hungary and Poland, to position “in the defence trench”, including the possibility of vetoing whether something like that would be included in the text of the agreement.

In this situation and the political picture, compromise was reached through the five-day debate and agreement, which was marked by a determination and vision, which established the European Union's long-term interests as an entity on the interests of some member states or on the political goals of the day. What was at stake at such a time was not abstract, but it is more than concrete. Not only was European solidarity endangered, but the very future of tomorrow's generations, the EU itself, the economies that have fallen down from successive crises, and especially from the pandemic crisis, they needed support and humanitarian recovery today. Tomorrow could be too late. But what did Sam bring?

Firstly, the Recovery Fund will consist of 390 billion euros in grants and 360 billion euros in loans, with a total of 750 billion euros. This amount will be made available to member states for the next three years. Of course, the ratio between loans and grants has changed from the initial spring proposal, which envisioned a 500 billion euro ratio in grants and 250 on loans, but it is higher than the proposal of the group of skeptical countries such as the Netherlands, Sweden, Denmark and Austria, which claimed the amount of grants to be smaller. The way this report was established reflects to some extent the balance (soft) provided during these five days of negotiations. These funds will be provided through EU lending, which is of historic importance because it is the first time this lending process is practically done at the European level and not at the level of member states. We can say that we have a point-out in the history of the European Union.

As the summit conclusions state: “in order to provide Union the necessary means to address the challenges presented by the COVID-19 pandemic, the Commission will be authorised to lend funds on behalf of Union on capital markets”. (Pika A3). The “Commission will be authorised to borrow funds in capital markets on behalf of the Union to the amount of 750 billion euros in the prices of 2018; the new net lending activity will stop late in 2026. The Union will use the funds borrowed in capital markets with the sole aim of addressing the consequences of the COVID-19” crisis. (Pika A5)

As mentioned earlier, this fund will be three years old, with payments by 2026. Its main mechanism is the Recovery and Resilience Facility (RRF), which makes up about 90 percent of the funding (672.5 billion euros), of which 360 grants and 312.5 loans). The other programmes are ActEU with 47.5 billion euros, Horizon Europe m 5 billion euros, InvestEU at 5.6 billion euros, Rural Development with 7.5 billion euros, Just Transition Fund with 10 billion Euro, RescEU with 1.9 billion euros, (Pika A14)

It is noteworthy that lowering the grant sum by about 110 billion euros, compared to the Commission's initial proposal, was achieved through cuts in a number of programmes aimed at modernising the Union's budget. The most ardent budget modernists were the Netherlands, Austria, Sweden and Denmark.

Thus, the addition of the Law Transition Fund (Just Transition Fund) drastically declined from 32.5 billion euros to 10 billion euros, while additional sources for Horizon Eerope have also been lowered from 13.5 (represented in the May proposal) to five billion euros. Also, the sources of the Rural Development Fund (Romanian Development Fund), aimed at modernising and improving environmental and agricultural sector, have dropped from 15 billion to 7.5 billion euros. Another problematic point was the removal of the EU4Health programme a new programme intended to improve EU collective health capacity.

The commission will consider a two-month period of national recovery and sustainability programmes, which must be presented by each member state. The European Council will then vote on the Commission's proposal, and the decision will be made by a single majority. In the implementation phase, the Commission will assess whether conditions for deportation have been met, following consultation with the Union's Economic and Financial Committee (an organ composed of officials from national administrations and central banks, ECB and the Commission). (Pica A19).

As for the 2021-2027 budget, it remains unchanged, at a total of 1,074 euro triliards.

A sort of controlling mechanism for the management of these funds was introduced on the summit (the mechanism, which is relatively away from controlling mechanisms set up several years ago in Greece's case). The agreement reached was a strong effort to ensure an internal cohesion of the European Union in this extraordinary period. However, experience shows that reaching an agreement (anyhow imperfect) is almost always better than not reaching any agreement. Yet, what remains behind these days of negotiations and after reaching that agreement is the fact that apart from its achievement, every crisis facing the European Union, it always seems more serious than the previous crisis and efforts seem to be more and more colossal. It seems that the European Union's story will continue to be written through major sacrifices and compromises. Challenges must be met.