Recovery summit: what kind of deal is possible?
Hopes are high that the EU summit which kicks off today in Brussels will finally produce an agreement on the coronavirus recovery fund. The Commission is proposing that 500 billion euros be allocated as grants and another 250 billion as loans. The Netherlands, Sweden, Denmark and Austria in particular reject the plan. Commentators are at odds about the opportunities and consequences of potential outcomes.
An imponderable risk
The recovery fund could have a dramatic impact on the EU's development, Iltalehti fears:
“Even if we are now being reassured that this solution will be a one-off, it will lead to many far-reaching developments. The creation of a reconstruction fund based on financial grants and shared responsibility could dramatically change the character of the EU. … The EU member states are to collectively take out the largest loan in their history, but in principle only the EU net contributors will have to take care of repaying it. Political developments could move in an unpredictable direction, both in the EU and in many of its member states.”
Failure would alienate Europeans
Der Standard says the criticism of the recovery fund is justified but it shouldn't be entirely rejected:
“The 'frugal four' net contributor countries - Austria, Sweden, Denmark and the Netherlands - are particularly stubborn in their bad-mouthing of the deal. There is no doubt that many of their concerns are legitimate, and justified in substance. And wealthy small states must also be allowed to defend their own interests vigorously. But if they're not careful the whole thing will start looking like pure obstruction. If the heads of government fail again with the budget, the situation will become critical. Trust in Europe would continue to decline.”
Italy has done nothing to boost credibility
Italy has thrown a spanner in its own works, Brussels correspondent Andrea Bonanni complains in La Repubblica:
“Europe was moved by the dramatic images of coffins loaded onto military trucks in Bergamo, and this triggered a wave of solidarity with our country in France and Germany. But the government and the political class did nothing to strengthen our negotiating position or at least support it with coherence and credibility. ... A country that asks for money, or rather demands it without offering a concrete commitment in return, legitimises the worst suspicions about its intentions. ... If we now emerge from the Brussels summit with a host of conditions to fulfil, we can only console ourselves with the fact that we ourselves are to blame.”
A two-trillion-euro carrot
The EU will be doomed if it fails to take this opportunity to ensure that the rule of law is adhered to, Rzeczpospolita argues:
“Huge sums of money are at stake, there is little time to waste - there has probably never been a better time to force Poland and Hungary to respect the rule of law than at the summit that starts in Brussels this Friday. ... After all, the fight for the rule of law is in its fifth year, and if its defenders fail to prevail now they'll lose all credibility. If a carrot worth almost two trillion euros doesn't force concessions from Warsaw and Budapest, what will? More objections from the European Parliament, reports put out by the European Commission, conclusions reached at EU Council meetings?”
Everyone knows Italy's debt is unacceptable
The real issue here is how much Italy is being allowed to get away with, economist Martin Visser comments in De Telegraaf:
“Both camps have basically said that they see Italy's position in the Eurozone as unsustainable and that they have little confidence in the country's economic future. ... Mark Rutte is demanding that the money be tied to certain conditions and wants loans so that he can make sure there are real changes in Italy's economic policy. His opponents argue that the country won't be able to service any more loans. Isn't that a tacit admission that Italy's debt is unsustainable? And why are people so afraid of conditions? Doesn't the European Commission always examine the countries' economic policies? Or is the cat being let out of the bag here, and this an admission that too little has been done to keep Italy in check in recent years?”
Sweden will give in
Stockholm will ultimately abandon its demand that aid money should only be granted in the form of loans, says Sydsvenskan:
“Sweden's resistance strategy is part negotiation tactic and part rhetoric for the home audience. ... Saying no could have negative consequences. Should Sweden, with its internationally highly controversial coronavirus strategy, block a rescue package that is crucial for leading the Union out of its biggest economic crisis to date? Does [Prime Minister] Stefan Löfven really want to take on this responsibility? Probably not. The price could be too high and make Sweden a pariah in some European capitals. In the end, Löfven will probably reluctantly allow himself to be persuaded.”
Stop the social meltdown
This summit is of enormous importance for the future of the EU, explains Politiken:
“Poverty, inequality and unemployment have exploded. And the extremists are waiting in the wings if the current governments can't solve the task that history has set them. ... We're talking about coronavirus. And we're talking about a social meltdown that has begun in many European cities which we normally consider to be relatively prosperous. ... After the financial crisis of 2008 the main objective was to create a robust financial sector, in 2020 it will be to create social robustness - as the new IMF director Kristalina Georgieva put it. The EU summit this weekend will show us whether our politicians are seizing the opportunity.”
Orbán openly blackmailing Europe
Even by his own standards, Orbán's wanting to use his veto if aid from the recovery package is linked to rule of law is particulary cunning, Népszava writes:
“Just how serious this threat is to Orbán's illiberal state is also shown by the fact that the Fidesz boss has given up his usual show dancing in Brussels and showed the face that people are used to seeing at home: that of a political bandit who does not even shy away from the most base kind of blackmail. The EU is in a predicament: to remedy the economic damage caused by the pandemic it must quickly adopt its budget. ... Apparently the message has been received in Brussels. EU Council President Charles Michel now appears ready to ease up on the Commission's rule of law requirement.”
Not really a concession
A compromise could entail disadvantages for Italy, notes business journalist Carlo Bastasin in La Repubblica:
“The 'frugal' have seized the opportunity and taken up the Italian demand for the money to be used quickly, in 2021 and 2022. They want to ensure that the reconstruction fund is linked only to the pandemic crisis and does not become an instrument that is permanently available to the European institutions. But Italy, which is worse off economically than other countries, needs exactly the opposite: it needs the European effort to continue for as long as it takes it to catch up with the others in term of economic growth - which could be up to five years.”
Hardly a role model
El País is annoyed to see that of all countries the Netherlands is now presenting itself as the guardian of EU finances:
“It's understandable that the Netherlands wants to step into the breach left by the British nationalism that acted as a brake on European initiatives in the past. And that after all these years of using London as a cover it has opted for the sad role of obstacle, which clashes with its brilliant track record as an open and cosmopolitan society. But it must also be said that the Netherlands lacks any kind of moral justification for its behaviour. The Netherlands encourages tax evasion, and its laws allow enormous profits to be diverted to tax havens. This discredits any discourse about fiscal discipline and seriousness in financial matters.”