EU recovery: where the money should be spent

Weekendavisen finds it reassuring that Denmark, Sweden, Austria and the Netherlands are putting up resistance to the plan:

“Somebody has to look after the money. Until now it was the British. ... The Smooth Four want to find a compromise that those who pay the most can live with. This will not prevent some of the money from being given as direct support, but here too, they have an essential function: they must ensure that those grants remain one-off payments, financed by long-term loans that are reduced by inflation. The Commission should not be given the right to levy taxes, as some want it to be; this should be left to the nation states with their various welfare state models.”

Delfi uses an analogy to illustrate why the debate on reconstruction is becoming so difficult:

“An old apartment building in which 27 parties live has been hit by a storm, and the administrator (the EU Commission), together with some influential residents (Germany and France), are proposing to take out a loan to renovate the building. In this apartment block, however, some of the residents have lived in an orderly manner, having replaced the windows and radiators long ago, while others just put wallpaper over the cracks in the walls. ... Most of the money has to be spent on their flats and most of it has to be paid for by those who took looking after their homes seriously and are not so badly affected by the storm. ... If the renovation is successful, this EU Commission will go down in history.”

Romania is to receive almost 20 billion euros in grants and another 11.5 billion euros in loans from the EU rescue package. Cristian Unteanu, EU correspondent for Adevărul, calls for the money to be invested in the future:

“If we want to seize this opportunity, we need to set up an [education] project that takes into account the future priorities of the European labour market. If not, Romania will continue to be only a provider of cheap seasonal and heavy labour in Europe - unskilled but increasingly crucial as the other member states ambitiously prepare their own citizens for high-performance future industries. The highly qualified jobs go to others, while we get the seasonal work.”

The money won't just appear out of nowhere, economist Carlo Cottarelli warns in La Repubblica:

“Italy would receive 170 billion: 23 percent of the total sum and thus almost twice our share of Europe's GDP. Half of this sum would consist of grants which, unlike the loans, Italy and the other countries that receive them would not have to repay. In principle, at least. But how is the EU supposed to finance this debt? That is the crucial point. Most of the money would come not from contributions from individual countries but from European taxes (including a digital and eco-tax), with which the Commission hopes to raise 30 billion a year. These are, of course, taxes that would partly be borne by European citizens, including the Italians.”

The EU Commission is playing a clever game, writes the daily taz:

“With its 750 billion euros, it is deliberately outbidding the proposal presented by President Macron and Chancellor Merkel, who had called for a coronavirus fund of 500 billion euros. The 'frugal four' already wailed at that plan, but now the EU Commission has shifted things so that Macron and Merkel's plan looks like a compromise. The Dutch and Danes are being given the opportunity to agree to substantial aid and go home and say that they prevented the EU Commission's plans and therefore 'the worst'.”

Even if the package is accepted in principle the EU's biggest debates are still to come, Postimees warns:

“Taking out loans usually means that the money also has to be repaid, and it's clear that not all states are equally able to do so. Firstly, because of past habits and financial discipline. And secondly, because there is no formula with which to calculate how economies will actually recover, i.e. whether there will be any money at all to repay the loans. With the Franco-German proposal, Berlin has moved away from the position it held to rigidly in previous recession years. One reason for this is the desire to avoid a break-up of the European Union. But much of the debating is yet to come - among the member states in the European Council. About the distribution formula.”

The reconstruction fund will drive the European integration process forward, says Kauppalehti:

“The money must be used wisely. Hopefully it will be invested in new technologies, green investments and R&D in particular. … The reconstruction fund will definitely strengthen solidarity among the member states and significantly increase the EU budget. There can be no talk of the EU being a federalised state yet, but the reconstruction fund is an important step on the path to a fiscal union.”

The Netherlands should no longer stand in the way of a joint borrowing, advises NRC Handelsblad columnist Tom-Jan Meeus:

“The government is in a resistance group together with Denmark, Sweden and Austria, but whether these three will stand firm is uncertain. The Netherlands threatens to become a new UK. ... But should Prime Minister Rutte, who is receiving an enormous amount of coronavirus credit every week in the polls, not dare to stand up to his own people, his own voters, because of this? It's already clear what the outcome will be: that our trading country simply has too great an interest in the EU to treat any inevitable compromise as something that undermines the nation.”