Brussels designs a reconstruction plan that would grant 140,000 million to Spain

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From ‘save yourself who can’ to ‘either I help you or we don’t save anyone’. This is how the EU has evolved in these pandemic months. Another lesson (apparently) assumed in the wake of a historical crisis. With the first chaotic reaction to the coronavirus parked, we enter a new phase in which the ‘salvation’ of the community project (in practice, the internal market) pivots on a recovery plan that the European Commission presented this Wednesday, three weeks late.

With a striking title, ‘Next Generation EU’ (‘The Next Generation EU’) and a key principle: to help the countries hardest hit by the pathogen (Italy and Spain, the third and fourth economies of the euro) in the interest of all. The formula, if it finally crystallizes – which is not certain – will allow them to receive unprecedented emergency coverage.

IN ITS CONTEXT:

11,500

million euros the Commission foresees that they could already be available in the autumn if its plan is approved before the summer. Although by definition, the bulk will be activated with the new Budget, on January 1, 2021.

Subsidies yes, but under control.

The Community Executive insists that, although it proposes billions in non-reimbursable aid, these are going to be linked to the monitoring of the European Semester – Brussels’ period of economic control. National recovery plans will have to be validated by Brussels and the rest of the partners.

30

years will be the maturity period established for debt bonds to be issued by the European Commission. The maximum horizon is in 2058.

Unprecedented economic crash.

The fund is created to respond to a collapse in the economy that, according to the latest Commission forecasts, will be -7.4% in Europe and much stronger in Spain (-9.4%), which would regain ground in 2021 ( 7%). The unemployment rate will climb this year to 18.9%.

The amounts will be finalized this Thursday, but in a first calculation, Italy would obtain 172,745 million euros (around 82,000 only in subsidies) and Spain, 140,446 (77,000 without refund). An altruism that emanates from the great absolute number of that sort of ‘Marshall Plan’: 750,000 million euros, of which some 500,000 will be enabled as subsidies and 250,000 in loans.

It is also proposed a historic bond issue in the markets to shore up their financing, in addition to new taxes (on CO2 emissions trading or the digital tax) to achieve extraordinary income; availability, until 2024. And two conditions for those who receive the money: they must guide it to enhance the challenge of a green and digital Europe; and the socio-economic recommendations that Brussels releases every six months for the correction of national balances (budgetary rules, adjustments …) cannot (as yet) be neglected; they have to be carried out.

It is the thick outline of that proposal for post-pandemic reconstruction that, it is insisted, it is not final. A difficult timetable lies ahead: a round of negotiations with the capitals; unanimous approval of the 27 member states – the next European Council will be held on June 19 and if the videoconference format is maintained, the negotiation will be more complex – the essential ‘yes’ of the Eurochamber and validation in various national parliaments.

The ‘exceptional’ package of 750,000 million will hang on that multi-year budget (2021-2027) of the EU that is supplied by state contributions and that, according to the initiative of the Commission, should move around 1.1% of Gross National Income (GNI). Its amount would be around 1.1 trillion euros, higher than the February proposal (1.095 trillion; 1.074% of GNI). Already then it failed; Too high for some and unambitious for others.

The details of the new plan? Here are some: 80% of the money obtained from the debt issue will be transferred to the States through one of the tools of that budget (the Resilience and Reconstruction Facility). The fundamental parameter will be the impact of the coronavirus which, in combination with other traditional ones (the Cohesion, Just Transition, or Agricultural funds are also insufflated), gives the billionaire hedges in direct proportion to the damage caused by the virus.

The second line of action will be to encourage private investment. And to all of the above a very specific third will be added: the reinforcement to health to gain muscle in the face of future crises with 9,400 million and to research, with 94,400.

With this program, Ursula Von der Leyen assumes the guidelines that Germany and France set for her last day 18 regarding the size of the fund and the weight of subsidies. He convinces Rome and Madrid after they both compromised with having neither coronabonds nor perpetual debt and even giving up a much larger scope, of up to 1.5 trillion euros.

Immediate reactions

“Collect many of our proposals” and is a “basis for negotiation”, Pedro Sánchez reacted with a message on Twitter in which he also called for “an agreement to access resources to enable us to reactivate the economy and overcome the crisis soon.”

On the same social network, same tone of Giuseppe Conte, Italian Prime Minister: «Great sign from Brussels. It goes in the direction indicated by Italy. Now we are going to speed up the negotiations to have the resources available soon. And, of course, ‘autobombo’ by the Frenchman Emmanuel Macron: «It is an essential day for Europe. The Franco-German agreement has made this progress possible. We must act quickly and adopt an ambitious agreement with our European partners. “

But, and further north? The ‘Von der Leyen ‘plan was born to try to reconcile with that club that defines itself ‘frugal’ (Netherlands, Austria, Sweden and Denmark). He demanded loans (no aid); counterpart reforms; and time limit on special coverage. And here it is not so clear that the president of the community Executive has managed to empathize. The first reaction from that flank does not look good. The positions are very far apart. Negotiation will take time, “warned a Dutch diplomat as soon as the plan was unveiled. Because yes, there are four, and Angela Merkel has ‘abandoned’ them – Germany also launches the rotating presidency of the EU on July 1st. But the ‘ok’ to the package requires unanimity. Tension.

Von der Leyen hopes to convince the austere

Ursula Von der Leyen did not fare badly in the first test that had to pass this Wednesday – that of the plan’s own presentation to MEPs. In his speech on the floor he sent a couple of messages to the club of the ‘frugal’. The first, explanatory: «Let me be clear: these grants are a joint investment in our future. They have nothing to do with the past debt of some EU countries. We are going that it is an “exceptional” measure, limited in time, it will be under control and it does not lead to Eurobonds nor to a mutualization through the back door, as the ‘frugal’ criticized. Conclusion: trust you can earn them.

The second message, loaded with depth, _the warning: “We are facing a crisis without guilt and the old prejudices must be cornered.” Neither the moral nor the reproaches thrown by the austere in the previous sovereign debt crisis will find understanding today. “This crisis has shaken our economic model for the last 70 years” and demands “bold measures because that (audacity) is what has allowed us to build a model (the European_European Union) that is unprecedented in the world.” “We are facing the true moment of truth,” he stressed at another point in his speech.

And yes, he heard reproaches in a half-empty parliament for obvious reasons. But from the ranks of the families with the highest specific weight there was support (more or less cold, but support after all). The popular Manfred Weber spoke of the return “of European solidarity; You are no longer alone, “he launched after recalling that not long ago, a handful of weeks ago,” EU flags were being burned “in an Italy that counted hundreds of deaths daily, frustrated by the abandonment of its neighbors. Socialist Iratxe García called Von der Leyen’s initiative “ambitious, pro-European” and aligned “with what this Parliament had been demanding.”

Dacian Ciolos, the spokesman for the Liberals, called the solution “surprising, unprecedented in the history of Europe”, although it differed with “some details”. From the Greens, Ska Keller appealed not to fall into the mistakes of the previous crisis, and to end up “imposing austerity” on the countries hardest hit by the Covid-19. From the left, the GUE / NGL spoke of a plan that “stays halfway.” While from the extreme right-wing group Identity and Democracy, the Netherlands, Austria, Sweden and Denmark were summoned to “continue to oppose this madness.” An awkward ally.

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