• EU.Merkel and Macron propose to create a 500,000 million fund against Covid-19

European Commissioner for the Economy (and former Italian Prime Minister) Paolo Gentilonihe has never hidden what he thought. Neither in Rome before nor in Brussels now. He denies austerity, the terminology of conditionality, and the ghosts of the past. He is a temperate man who respects the rules, but who aspires to make them as beneficial as possible. That is why he views the Stability Pact as an instrument, not a dogma: "We did not activate its emergency clauses because three or four countries were in crisis and we will not cancel them if only three or four improve," he says. Gentiloni does not get wet about the size of the Recovery Fund that her boss will present next week, but applauds the Franco-German proposal, asks for ambition and promises in an interview with several European newspapers firepower: "Fiscal, common, money for real".

France and Germany have suggested a Recovery Fund with up to € 500 billion in transfers. Will the Commission proposal go in that direction? We are in the final phase for defining the proposal. The Commission has done an excellent job defining the financial needs of the recovery, and it was not easy to mix macro and sector analysis. We are not unaware that there are still different positions, but our proposal will be very solid in its analysis, at the base. Then, from the political side, it will be up to the European Council to decide, and I believe the Franco-German position undoubtedly paves the way for consensus and a potential agreement. You have drawn a link between the specific recommendations that they presented yesterday and that Recovery Fund. Will there be conditionality in the funds to the fulfillment of the same? I would not say conditionality. One of the instruments that our recovery plan will include will be connected with the European Semester process and therefore with the recommendations. The objective of this recovery financing package is clearly defined by the European Council and is first to support the most affected sectors and geographic areas. And secondly, keep in mind in the recovery process the medium and long-term objectives, the green or digital transition. Funding is more tied to priorities, not conditionalities. 90 years ago we had a Great Depression, 10 years ago the Great Recession and now we must avoid the Great Fragmentation. Angela Merkel and Emmanuel Macron are aware of these risks. Could you be clearer about that link between reforms and possible access to funds? There is a confusing part of the message. The message is very clear. The Commission is calling for an expansive fiscal position from all Member States. This has never happened, traditionally the Commission clearly differentiated. You know the language in which those with a fiscal margin are asked to use it and the most indebted are told that they should be more careful in their expenses. Now it is something else. If you look at the recommendations, we don't ask every country to make this reform or that one. Yes, there are reforms in them, but investment and spending appear more prominently. For example, we encourage everyone to invest in their Health systems. The link with the European Semester that will be in one of the instruments of the strategy should not be considered with the traditional terminology of conditionality. The Fund will give the European Semester firepower because it provides fiscal tools, common money for those affected. That will be new. The link is not with conditionality, but to a mix in which there will be investment, spending, reforms, and above all, firepower from the Commission. I repeat: fiscal tools, real money. Can it be the door to austerity programs? No. We should not use the logic or terminology of previous crises. What I find extremely interesting and hopeful is how different the reaction is this time around. The answer is not following logic or the cultural and economic framework of 10 years ago, and all actors should see it that way. France and Germany see this in their proposal, which is completely different from the responses of 10 years ago. How long will that logic be maintained with the emergency clauses in the Stability Pact? We have no experience with which to compare. Only what is written and which, quoting from memory, says that the clauses are activated in the event of a severe recession that affects the EU as a whole. That means that the activation will continue until that recession, that severe blow that affects Europe as a whole, ends. His forecasts contemplate a very powerful rebound across the continent next year. I translate: we did not activate those extraordinary clauses of the Stability Pact because three or four countries were in crisis and we will not cancel it because there is a good situation in three or four countries. They will change when we have a solid improvement in the situation in most countries. Our forecasts say that it could be next year, but it depends on what happens in the set. Hopefully we will hit the rebound, but the decision will be a political judgment. Excuse me for insisting, but at some point it will start to return to normal and that means starting fiscal consolidation. Now they are not going to open excessive deficit procedures, but if they do so next year the difference will not be very large. I do not know if the words returning to normality is something that we are really going to experience in the coming months. We will have a long coexistence with the pandemic, even if it is at its lowest level. And at the same time, recovery must be used to prevent past mistakes. We have to correct the economic models. I am thinking here for example of environmental sustainability, but also that we should not sacrifice investment when fiscal consolidation begins. It will be a huge challenge for the next few years to maintain a strong level of investment when the peso leans towards reducing fiscal imbalances. But reforms will be required and the Commission requires them. The answer is yes, but with buts. It is part of our mission, but it is not 'the' mission, the only one. We have to finance solidarity, aid, whatever you want to call it, to bridge the excessive divergences between member states, but also between citizens and social areas in the same country. The second part is to support investment, especially in our strategic objectives as a Union, such as the green transition, social sustainability, and the digital transition. And we should certainly use the opportunity for recovery to implement the reforms that are so necessary in various countries. Do you think 500,000 million in transfers will be enough? On the quantities, let me answer only that we are in the last mile of the proposal, in the final phase of the development of the tools. Our proposal will not be exactly what is in the Franco-German document, but I have to ask you to wait a bit. You know my position but at this stage I prefer to avoid specific figures and details. The Recovery Fund will be used for the most affected regions and sectors. How do you decide what they are? It is not easy at all to define it. We are working on it. The European Council used this statement of sectors and geographic areas. We have metrics for both criteria, but we have to transform it into formal criteria and it must be approved by the countries. It is a process. There are solid foundations for analysis, and while it is not easy to transform it into practice, the commission's technical services are very good at this type of analysis. In the recommendations they ask Germany to invest more, but it is the country that has dedicated the most money to aid programs for its companies. We appreciate the fact that in Germany there is a strong investment package this year to deal with the crisis, but we emphasize that It should not be just an extraordinary plan. Public infrastructures, tools for the green transition, are needed for different sectors. It is very necessary that an important country like Germany sets a good example in public investment, because unfortunately we will face a lack of private investment in 2020 and probably also in 2021. We are talking about hundreds of billions of euros, because many potential investors have problems with liquidity. We appreciate what we have done and encourage more. Germany accumulates 52% of all state aid approved by the Commission in the EU. Isn't it too much? The Commission has allowed this temporary framework of State aid, it would not be logical to complain that those with fiscal firepower take advantage of it. We do not blame at all what it does to Germany with the tools that we have provided, what we say is that there is a need to balance the situation to have a Level Playing field in the single market, a level playing field. to try to restore, although with differences perhaps, the Single Market as soon as possible. It is an asset to Europe and we will need to return, sooner or later, to stable competition rules. Do you still think that the tourist season can be saved? We are all very clear that we will: we will have a summer season, but with other characteristics. The Commission's effort is to try to coordinate as much as possible the different decisions. It is not imposing prescriptions, such as safety distances in restaurants or beaches, that is decided by national or regional or local authorities, not us. But we do push towards certain protocols at borders to avoid discrimination and to support tourism in general.

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