On Wednesday, European Commission President Ursula von der Lane is set to unveil a long-term EU budget plan as well as his proposal to dig Europe out of a historic recession. However, deep divisions between member states still need to be reduced, which could increase the risk of urgently needing relief.
The conflict is compounded by the growing anti-EU sentiment, and the rapid recovery of money in countries most severely affected by epidemics, such as Spain and Italy. Leaders have warned that the future of the European Union may depend on its aftermath.
An unequal recovery would “disrupt our single market and set the scene for significant political and financial tensions in the eurozone and the EU,” warned Mario Senteno, president of the European Union of Finance Ministers, in a recent interview with the Greek newspaper Politis. “We’re going to be in a financial crisis. A lot is at stake.”
Grants vs. n
The euro survived the eurozone crisis between 2010 and 2012, with huge EU bailout loans in countries such as Greece, Portugal and Ireland and the European Central Bank’s pledge to “do whatever it takes” to protect its currency.
As EU leaders scramble to provide more relief money, the pandemic remains to be seen whether the pandemic recovery fund will provide loans or grants to member countries. Net contributors to the EU budget, including the “Fragile Four”, will be needed to pay more to use the grants. In the meantime, relying on loans means increasing the responsibility of the most indebted countries, such as Italy.
According to Jacob Funky Kergaard, a senior fellow at Peterson International for International Economics, the pitch could be a big change in Berlin’s position, emphasizing the severity of the crisis and changing the tone of the discussion.
Noting the importance of avoiding the debt crisis in the bloc’s third-largest economy, Kerkegaard said, “It was Germany that realized that Italy was not Greece.” “If we have another unsatisfactory recovery, it is very bad for the EU and very bad for the German economy itself.”
About 60% of Germany’s exports are traded between the European Union.
The proposal still needs to be formalized by the European Commission and not all 2 member states are on the board yet. Austria, the Netherlands, Sweden and Denmark have been seen united against the Franco-German plan.
But without Germany, their opposition seems to be narrow, said Mujtaba Rahman, Europe’s managing director for the consultative Eurasia Group.
“In recognition of the scale of the challenge, there have been large-scale movements in most European capitals,” Rahman said. “Decided what you don’t get from ‘Frugal Four’. It’s effectively restoring the old post.”
A ‘very difficult discussion’
Since the European Commission’s framework was unveiled this week, sincere discussions will begin.
Rahman expects the commission to call for ০০ 600 billion ($ 54 billion) to ০০ 100,000 billion (63 63.63 billion) in recovery funds, although the number of headlines could be reduced during the talks. He thinks the proposal will try to bring a mix of cheap loans and direct grants to more conservative northern states on board.
But it’s not the only issue that needs to be raised for a budget of about 1 1 trillion (1 1.1 trillion).
The European Union’s budget budget, which runs from 2021 to 2022, has been tightened because BRACSIT has left a huge hole in the bloc’s finances over the next seven years, said Gunram Wolf, director of Brugel, a Brussels-based think tank. The United Kingdom was the second largest contributor to the European Union.
Whether rich countries will still get concessions and, importantly, how blockchain-type programs will help member states will also have to come to terms with how much money they are expected to receive. The epidemic complicates these issues, which were already controversial.
The timeline is tough. An agreement between EU leaders will be needed in June or July to get relief funds to Europe in the second half of the year, according to Rahman, followed by a confirmed vote in the European Parliament in early September. The lack of a busy summer tourist season is expected to hit Spain, Italy, Portugal and Greece in the coming months.
Senteno, who also serves as Portugal’s finance minister, spoke of the urgency of the weekend.
“It would be nice if we could find an agreement before the summer to reassure our citizens, organizations and markets about the key features of the recovery fund and add credibility to the EU response,” he tweeted. “It will be a very difficult discussion.”
The political storm is raging
In recent times, political leaders have not been reluctant to deal with the possible consequences of failure.
“We must prove that what is at stake is not the national contribution of one or the other. It is the lifeblood of the economic project that has enriched us,” said French Secretary of State for European Affairs de Montchalein in an interview with Le Point magazine on Monday.
Former Italian Prime Minister Enrico Letta said on Friday that many Italians feel they have been left alone to deal with the devastating effects of the epidemic, 2015-1. Former Italian Prime Minister Enrico Letta said on Friday that anger over the immigration crisis had escalated.
“That’s why, I think, there really is a need for a very comprehensive, fast and effective European response,” he told CNN Business’ Richard Quest.
If Kyrgyzstan and other southern countries suffer a slower recovery than their northern neighbors, they will provide Eurosceptic power and political instability in the region, Kyrgyzstan said.
In Germany, the warring factions are guaranteed a bigger loan from the state, which means more people will survive. In Italy, however, the risk of corporate defaulters is increasing – underscoring the need for a more integrated strategy.
“If you don’t get some level playing field here, that’s going to be a real problem,” Kierkegaard said.
And Germany has often come to terms with grants, but has not agreed to the recent load of capital guarantees needed to raise relief funds before 2021, Rahman noted. Such delays can lead to losses.
Asked about time, he said, “the single biggest risk.”
– The report is contributed by Pierre-Elliott BUET.