From plan to cash: the EU's road to recovery
A year ago, Europe’s political leaders locked into arduous negotiations for five days and four nights on end. But the summer summit was worth staying up late for, leading to a breakthrough in the form of a €750 billion recovery fund to relaunch the EU’s pandemic-battered economy.
This week they will meet again in Brussels. A second and a third wave of Covid-19 has killed thousands more, Europe has approved the use of four different vaccines and has handed out at least one shot to just below 40% of its population. Yet not one eurocent has come out of the fund.
Last week, European Commission President Ursula von der Leyen started touring European capitals to give the green light to some of the recovery plans countries had to submit to get access to the money – including Luxembourg – a trip that she will continue on Monday.
The Eurocrat wonders whether traveling to every single country is the best way for the German politician to present plans meant to make economies more sustainable. But that’s an aside.
In anticipation of future pay-outs, the Commission issued the first-ever European bond, raising €20 billion. This is why last year’s summit was deemed “historical”: it was the first time countries took joint responsibility for debt – even if the facility so far is temporary.
What Europe still has to figure out, is how to pay the money back, given that the Commission has no own resources. But that is another aside.
Portugal was first on von der Leyen’s tour of capitals and she praised Prime Minister Antonio Costa’s work. A pragmatic man, Costa asked the question that mattered most to hime: “Now, can I go to the bank?”. “Now you can go to the bank,” von der Leyen replied.
She wasn’t quite right - EU ministers still have to give their blessing to the national blueprints, she should have reminded Costa, and has four weeks to do so. Leaders this week in Brussels will not go into the details but will no doubt exchange views on how well they have done.
Everybody agrees Europe is facing economic challenges, but nobody wants to open the Pandora’s box of what to do with the bloc’s rules to contain budget deficits, which have effectively been suspended since the beginning of the crisis. No country likes the rules the way they are. Finding consensus about a revision will be a tougher task for Commission Economics chief Valdis Dombrovskis.
A more immediate concern is to keep people and goods flowing across the bloc. The so-called Delta variant of the coronavirus – a more contagious mutation previously known as the Indian variant – has shown the pandemic is far from over. Nevertheless, leaders should be able to agree on how to reduce travel restrictions given that many countries already use of a Covid-19 “passport”.
The Commission wants people holding the certificate – those who have been vaccinated, recovered, or with a recent negative test - to be able to travel freely again. However, if anything, governments have failed to coordinate measures in the past, so do not expect much. So check before you travel!
If last week was Transatlantic week in Europe, this is Russian week. Just as US president Joe Biden was about to meet Russian President Vladimir Putin in Geneva, the EU’s chief diplomat Josep Borrell unveiled his proposal for a strategy towards the Kremlin, another issue the summit will discuss.
The relation with Russia has never been an easy issue for the EU. Everyone agrees Russia’s aggressive behaviour over the past few years was unacceptable. But while Eastern and Baltic countries see Russia primarily as a threat, Germany and France see the potential for economic cooperation.
Borrell is trying to reconcile these different positions, calling for the EU to push back against human rights violations, constrain Russia’s ability to undermine the EU by coordinating with partners such as NATO and G7 while at the same time engage Russia in the fight against climate change and terrorism.
The Eurocrat sees a lot of wishful thinking in Borrell’s paper, which advocates for a stronger cybersecurity and defence policy and for the EU to limit Russian resources “to carry out its disruptive foreign policy.” At the same time, the Nord Stream 2 pipeline, which pumps natural gas from Russia to Germany bypassing Ukraine, is almost ready to go.
What the Eurocrat will also be watching:
Migration will be another hot topic. Countries such as Spain and Italy are seeing an increase in migrants, putting their lives at risk to reach Europe’s shore during summer. This year alone, more than 33,000 people have arrived in Europe by crossing the sea while at least 807 lost their lives in the attempt.
On Wednesday, just ahead of the meeting of the prime ministers and presidents of the Union, the European Parliament will discuss how to revive the Malta Declaration, a pledge for countries to share the responsibility of taking in migrants rescued at sea by frontline states.
On another note, the Parliament is holding a mini-plenary session in Brussels and on Thursday, where members will be finally voting on the EU Climate Law that will make the goals of reducing carbon emissions at least 55% by 2030 and achieving climate neutrality by 2050 binding.