European leaders began a race against time on Friday June 19 to agree before the end of July on a massive post-coronavirus recovery plan. After several video conference summits since March, the heads of state and government are expected to meet in Brussels in mid-July. And no one excludes that a final meeting is then necessary before the summer break in August to reach an agreement.
Many antagonisms were indeed noted Friday, during the round table carried out in videoconference. The objective to be achieved is, it is true, very ambitious. The 27 are invited to vote on an envelope of more than 1,800 billion euros, to be spent during the period 2021-2027.
On the one hand, it includes the economic recovery plan worth 750 billion euros, proposed by the European Commission to support the countries, regions and sectors most in difficulty after the Covid-19 pandemic. ; on the other hand, the multiannual financial framework, currently set at € 1.1 trillion, which provides for EU spending over seven years for common policies such as the CAP, the European regional development fund, and new projects like the European Defense Fund.
→ European recovery plan, instructions for use
The unanimity of the Twenty-Seven being required on budgetary questions, the difficulty of agreeing is increased by the Commission’s proposal to break the taboo of a common debt. The recovery plan, which aims collectively to get EU countries out of a historic recession, would indeed be financed by a loan made by the Commission on behalf of the European Union on the financial markets. A third would then be made available to the States most affected by the crisis in the form of loans and two thirds would be paid in the form of direct aid or a subsidy.
The loan could then be repaid by own resources of the European Union which would be created by then, for example a carbon tax at the borders or a tax on the digital giants.
The 27 must however overcome important differences, as regards the amount of the plan, its duration, the balance between loans and grants, the criteria for allocating aid, as well as the delicate question of a “Conditionality”, i.e. the counterpart (for example of reforms) demanded from a State in exchange for these funds.
An agreement would mark a major step in European construction. These advances towards budgetary solidarity between Member States were made possible by a Franco-German agreement sealed by Emmanuel Macron and Chancellor Angela Merkel on May 18.
But four countries still show strong reluctance. The Netherlands, Austria, Sweden and Denmark – the four frugal – are net contributors to the European budget – they pay more than they receive – and their opinions are often annoyed by the lack of structural reforms undertaken in recent years in certain southern European countries.
These countries will seek in the coming weeks to reduce the amount of the stimulus package, reduce the subsidy part and increase the conditionality of the loans. Some will also demand an extension of their budget rebate under the Multiannual Financial Framework – a rebate inherited from the British rebate and which aims to compensate for the fact that they are little affected by certain Community policies.
L’ambition d’Angela Merkel
Friday evening, Dutch Prime Minister Mark Rutte thus tempered the prospect of a final agreement of 27 on the stimulus package in July. ” It is uncertain whether it will be finalized at that time “, He commented, without excluding that other summits are necessary” during the summer or beyond ” Austrian Chancellor Sebastian Kurz has warned against debt sustainability: aid must be ” punctual “ and “Limited in time”, he insisted.
“A consensus is emerging, which is very positive, but the difficulties should not be underestimated either”, summed up the President of the European Council, Charles Michel, conductor of the negotiation process. The latter must now start bilateral consultations with the Member States in order to present, probably before the end of June, a revised proposal for this plan.
Angela Merkel, who will play a major role in the discussions since Germany will assume from July 1 the rotating presidency of the Council of European Ministers, welcomed the fact that the principle of common debt is not “Questioned by person”. “It is no exaggeration to say that we are facing the greatest economic challenge in the history of the European Union”, she insisted.
“Europe must live up to history (…) Let’s find an agreement at 27 in July! “Emmanuel Macron added on Twitter.
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