Thursday, June 18, 2020
At the end of May 2020, the European Commission has put forward a proposal for the economic recovery in Europe in the aftermath of coronavirus. The Recovery Plan is two-fold: (1) Next Generation EU is a new recovery instrument of €750 billion which will boost the EU budget with new financing raised on the financial markets for 2021-2024, an instrument which is part of the larger (2) Multiannual Financial Framework 2021-2027 of more than €1 Trillion. Considering that the European Council will discuss this issue tomorrow via videoconference in order to make decisions on the proposed recovery plan, the ECPM MEPs would like to mention the following:
The ECPM MEPs agree overall with the EU’s involvement and facilitating the recovery process, but there are some boundaries which should not be crossed. MEP Cristian Terhes, for instance, points to the subsidiarity principle which is at risk: “While a recovery plan is needed to boost the economies of the EU Members States, certain provisions in this recovery plan will lend more power to the European bureaucracy, implicitly undermining the sovereignty of the Members States, which is deeply concerning. In order to have a stronger, united Europe of nations, the solutions of this recovery plan have to be in line with the constitutional requirements of each Member State.”
Another aspect which is concerning is the huge amount of debt this recovery plan entails. Our MEP from The Netherlands, Bert-Jan Ruissen, echoed that worry by saying that “in difficult times like these the need for European solidarity is evident. However, the European Commission is proposing in its COVID19 recovery plan to show solidarity by issuing an enormous common debt under the name ‘Next Generation EU’, partly paid for through common taxes. In my opinion, these plans are the opposite of showing solidarity, and instead, create a risky and unsustainable debt union. This is not a solution for the current crisis, as it merely passes the debt on to the next generation of Europeans."
The greatest challenge of the recovery plan has proven to be the differences in the various economies of the EU and striking a balance of fairness when it comes to the benefits and obligations we share on this path to rebuilding. Peter van Dalen, MEP rightly said that “it is in the Dutch interest that countries such as Italy remain in good financial standing. After all, many of our companies export goods there and we have financial interests south of the Alps and the Pyrenees.” He also pointed to the reforms that were already underway in the Southern European countries when the pandemic hit. “The incentive for reforms could be removed if Southern governments are simply given handouts. Rather, it seems the key to finding a solution is an extensive loan setup for these countries, the conditions of which should be tied to environmental and climate objectives. That way, financial restoration leads to creation restoration, which is necessary.”
Our MEP from Germany, Helmut Geuking, shares the same view on lending to the most affected countries, taking it a step further on the specifics: “I propose the introduction of ‘single purpose bonds’, meaning loan packages that would finance a specific purpose (childcare support for parents, infrastructure projects, climate protection measures etc.). The purpose and amount need to be jointly agreed upon, the bonds can only be held by the European Central Bank and they would carry a repayment date, instead of interest. I believe this is needed in order to prevent the euro from falling apart; it would be a long-term, future-proof and flexible solution in order to stabilize Europe and reconcile the independence of Member States with economic development/ responsibility and reform demands. This would not represent a significant burden for future generation.”
Brussels, 18 June, 2020