Reconstruction: Merkel and Macron face huge task

Former Romanian prime minister and current Social Democratic MEP Mihai Tudose explains on the blog of the TV channel Digi24.ro why Germany also has a strong interest in granting further aid to economically weaker states:

“Half of the state aid approved by the EU since the beginning of the crisis will be given by the Merkel government to German companies. But the economically weak EU countries would collapse without direct external aid. And 59 percent of German exports go to precisely the other EU countries, which in turn account for 66 percent of German imports. I hope that Ms Merkel manages to explain to the young [Austrian chancellor and critic of the plan] Kurz what risks upsetting the value chain of an integrated economy entails - under the influence of a sudden recession.”

Further measures are needed to supplement the Macron-Merkel package, write five major French trade unions and the German Trade Union Confederation (DGB) in a joint declaration published in Le Monde:

“The economic recovery must take place with an eye to solidarity and social justice. It must respect the need for an economic, fiscal and budgetary convergence of the EU member states which finally breaks with austerity. The European Union must respond to the challenges of recovery by strengthening its social dimension, rethinking its production models and consolidating its position as a global player targeting a more sustainable economic model. We need an effective recovery strategy that goes beyond the 500 billion euros announced by France and Germany.”

A lot more persuasion will be needed if the plan is to become reality, the Neue Zürcher Zeitung points out:

“The path is now becoming even more arduous. The fund can only be created if all 27 states and their parliaments say yes. For now, the division of labour between Berlin and Paris consists in the French trying to convince the countries in the south and the Germans those in the north of the merits of the project. This will be particularly difficult for Merkel. The Dutch, Danes and Swedes are currently forming a united front of rejection of shared community debt. Whether the countries in the east will offer their support is also uncertain. Chancellor Kurz reported from Vienna that he had a 'good telephone conversation' with the Scandinavians and Dutch and that they all agree that they don't want to become a debtor community. And Hungary, too, will put a price on its consent to the plan.”

It's a good thing that Denmark is so strongly opposed to debt mutualisation, Jyllands-Posten puts in:

“The [Southern European] countries had big problems with their national budgets long before the corona crisis. ... A French train conductor can still retire 15 years earlier than his Danish counterpart. ... It's quite legitimate to ask why the Southern European countries did not put their houses in order after the financial crisis, as those in the North did. ... Is it solidarity when Northern European taxpayers, who have endured extensive reforms have to pay for the fact that taxpayers in Southern Europe were spared such drastic measures? ... It's gratifying that the Danish parliament is almost unanimously asking the same questions.”

Efimerida ton Syntakton sees Merkel and Macron's plan also as a reaction to the decision taken by Germany's Federal Constitutional Court in early May:

“With their decision, the judges in Karlsruhe cast doubt on the will - and the ability - of the ECB and other European institutions to do what they could to save the Eurozone. All this against the backdrop of the uncertainty overshadowing the continent in the face of the pandemic. ... By the looks of it, the court wanted to severely restrict and even destroy solidarity in the Eurozone. Naturally, the chairmen of the EU Commission and the ECB took a stand against the court's decision. Basically, Merkel gave a political response to the ruling on Monday with her approval of Macron's plan. So the court's decision is now coming back at it like a boomerang.”

The proposed reconstruction programme is heading in the wrong direction, Le Courrier warns:

“The absence of the requirement to repay these funds is contingent on 'a clear commitment by the member states to sound economic policies and an ambitious reform agenda'. ... The choice of words is reminiscent of the newspeak and neoliberal recipes that were foisted on Greece not so long ago. Worse still: since the only allocation criterion for the future European recovery fund so far that it supports 'the most affected sectors', one can bet that the billions borrowed from European taxpayers on the financial markets will go towards reviving the automotive industry, civil air travel and mass tourism. That will get us going again, to be sure, but it will lead straight to disaster. ”

The Netherlands won't accept the Franco-German initiative, De Volkskrant explains:

“[Prime Minister] Rutte potentially has two crowbars to break up the Franco-German plan. The last resort is that the First and Second Chambers of Parliament reject the expansion of the EU Commission's lending capacity. This is the nuclear option, effective but not without consequences: the Netherlands would be pilloried by Europe and would have to get along without allies for a while. ... It would be better to only threaten to use the nuclear option - as is done in times of war - in order to force changes. ... The EU summit in June promises to be one big haggling session.”

The Danish government should rethink its stance, Politiken urges:

“Denmark has reacted cleverly with rescue packages at the national level. And that's just what we should do at the EU level, too. Both in the interests of cohesion and for our own sake. As an export nation, we have a huge interest in the EU getting back on its feet quickly. 'When the facts change, I change my mind,' John Maynard Keynes, the ideological father of expansionary fiscal policy, allegedly said explaining a change of heart. The Danish government should show the same openness vis-à-vis the plans of France and Germany.”

Público sees the plans as a glimmer of hope for Portugal:

“Nothing has been won yet, nothing is certain yet, so it's worth persevering. We still have to win against the tormenting nationalisms of the East and the cynical egoisms of the North. But for a country like Portugal, which is faced with full-blown economic devastation and doubts its strength to overcome it, the news from Europe today is a real, albeit weak, sign of hope.”

The anti-EU parties Lega and Fratelli d'Italia will have a hard time with their protests planned for early June if the Franco-German recovery plan is approved by the EU, columnist Antonio Polito writes in Corriere della Sera:

“If the Franco-German initiative is implemented, nothing will be the same as before. With Europe cooperating by transferring resources from one state to another for the first time, thus breaking a taboo, any sovereign uprising against this Europe would seem incomprehensible to the public. If from the mists of the pandemic a new good giant of solidarity with Italy emerges - and this giant is not China or Putin, as a certain naive newcomer to foreign policy [Foreign Minister Luigi Di Maio of Cinque Stelle] had hoped, but Europe - who would want to throw stones at it?”

Les Echos talks of an historic agreement:

“People often say the EU only makes progress when it is going through hard times. They criticise its divisions and stress its weaknesses and lack of leadership. ... All the more reason to cheer when it finally stands up for itself. In accepting the principle of debt mutualisation within the Union, Emmanuel Macron and Angela Merkel have taken a decisive step in European integration. They've given Europe a dimension it has never had before: that of a union based on solidarity. A union capable of overcoming particular interests. One that can stand up to the two superpowers China and the US. In short, that of a political project that is consolidating itself in response to the global explosion of the Covid crisis.”

Paris and Berlin are sending a powerful message, Brussels correspondent Andrea Bonanni is pleased to report in La Repubblica:

“And they are taking a surprising step that pushes the game forwards, but also sideways [like the knight in chess], and skips the insoluble debate over the mutualisation of debts. ... The Franco-German initiative not only bypasses the resistance of the more selfish northerners. It also puts a damper on the Italian sovereignists, who have already begun to target the ESM [European Stability mechanism] and its conditions. A conditional loan is often seen as an encroachment on a country's sovereignty. A donation can be linked to certain conditions without affecting the dignity and autonomy of the beneficiary.”

This is a remarkable paradigm shift, writes NRC Handelsblad:

“Another key difference [vis-à-vis the previous package] is that the Franco-German proposal does not envisage giving the money as a loan but allows those member states that have been hardest hit to receive the money as a gift from the fund. The European Union as a whole will be responsible for servicing the loans, and member states are to contribute to this as much as they can. The two countries are thus clearly taking sides on the issue that has been the focus of European discussion in recent weeks: loans or gifts? ... These proposals clearly represent a further step towards a common European debt.”

tagesschau.de believes it knows why the German politicians and diplomats gave up their resistance to joint liability for the loans:

“A collapsing internal market would also and especially be a huge problem for Germany. How are German companies supposed to get back on their feet when their European neighbours are down? Without the means to continue importing German products? That's why important business representatives intervened behind the scenes - especially at the EU level. And relying solely on the ECB and its 'bazooka' no longer works. This only became clear after the ruling of German Federal Constitutional Court on the bond purchases. No, what is needed now is courageous politics. Quick, supportive answers in this exceptional situation.”