Still on the European summit

The EU summit is still on, at the end of the second day. It is too early to comment on it, as I do not know what the outcome will be. But I said to a friend, a former ambassador, that I see it as positive that leaders spend a good amount of time trying to get to an agreement. They have in front of them big issues, with many possible consequences, and extremely high costs. These are no simple matters, and we are living in extraordinarily exceptional times. I would be worried if they decided to run through the issues, superficially and with no real commitment. It is true that some of them do have that kind of attitude. They are the lightweights. But the key players take these matters seriously. I can only appreciate that. To call names and badmouth them is a childish approach I do not accept.   

The forthcoming EU summit

On Friday, the EU leaders will meet in Brussels. This will be the first face-to-face meeting since the beginning of the pandemic. The agenda is about money, lots of it. They must decide if they approve the Commission’s recovery proposal, its budget, and the disbursement modalities. It is indeed a delicate agenda

There are two camps. One side wants the new money to flow to each country, with little interference from either the Commission or the Council. In their views, it is up to the national governments to decide on the programmes and projects to be funded, accepting however that those funding decisions must fall within the broad framework proposed by the European Commission. Italy, France, Spain, and Portugal are within this group.

The other side, led by the Prime Minister of the Netherlands, advocates a greater oversight by the European Council. That would mean that country allocations should be endorsed by all, not just by the government concerned. It would give the Council, where the heads of State and government sit or are represented, the authority to say no a country’s allocation plan. They do not see this approach as interference. They think that the volume of money is very substantial, and it should, therefore, be used not only for recovery but also for economic and administrative reform at the national level.

As of today, it is unclear what the outcome of the summit might be. The conflicting positions show that some countries are convinced that others are not doing enough in terms of economic transparency and administrative effectiveness. They see a widening gap between development levels. And they are afraid that the richer part of Europe will be asked to keep contributing to States that are not doing their best in terms of political performance. The opposing side considers such a position as a prejudiced view. In my opinion, both groups of countries have some valid points that must be discussed. Indeed, it is time to discuss the reasons for poor performance and also some of the prevailing national prejudices that are still alive in different parts of the European Union.

The European recovery

Today, Chancellor Angela Merkel and President Emmanuel Macron stated they will advocate for the establishment of a €500 billion recovery fund. In their view, the money should be raised in the international capital markets by the European Commission, as a common pot aimed at helping the Member States seriously affected by the Covid-19 pandemic. The disbursements would be approved by the Commission, following the criteria that are yet to be established. It would also be the Commission that would have the responsibility to pay the markets back, meaning, the principal and the interests or dividends.

I am not sure this will work. Austria’s leader, Sebastian Kurz, has already voiced strong objections to such an idea. He does not want to see a recovery mechanism that is dispensing grants to the States. He is for loans. Loans make the leaders a bit wiser than just getting free money, he seems to believe. We can expect that other voices will join his own.

In view of this, my position is that most of the money should be channelled to fund joint multinational projects that would reinforce the European system and would have an impact on the EU’s strategic self-sufficiency in matters of public health, bioresearch and other critical emergency response mechanisms. The pandemic has taught us that the health sector is vital, not only for medical reasons but also because of its impact on the functioning of the economy. We cannot no longer talk about strategy without including the strengthening of our common capacity to deal with epidemics, critical hospital equipment needs and essential medicines. Money should also be spent on common logistics and rapid deployment networks.

It is also clear that the recovery fund must be operational soonest. There is urgency. We are not yet at the end of the crisis. The intensity of the pandemic can have a new surge at any moment. We must be better prepared this time. In addition, the economy of the most affected countries needs resources that would encourage new investments, in greener areas, and in matters that address the issues of income and social security. The priority should go for those projects that are fundamental for a stronger Europe and that are not too much dependent on resources and means of transportation we do not control.

This is a time to think differently. The fund, if it is thoughtfully planned and wisely administered, can become a tool for transformation and progress. The alternative is for it to become a reason for further divisions within the European space. Nobody wants that to happen.