The heads of state and government of the 27 reached a historic agreement on Tuesday at 05:30 in the morning. Although it is paradoxical, they broke molds to start with speed. Just a few months after Europe registered its first Covid infections19, a € 750 billion package was approved . It has been an eternal summit in Brussels, four days and very bitter, and citizens have the feeling, as always, that everything is going very slowly. But if you look back, the crises in 2008, 2010, 2012 or 2015 will remind you that it took years then to create the minimally necessary instruments. Now, on the other hand, just over a quarter has been sufficient for a single triple network.
On the one hand, 540,000 million euros in liquidity lines for companies, states and jobs, which were already approved in the spring. On the other, the mentioned Recovery Plan, with three quarters of a trillion more. And to complete: the EU Budget for the period 2021-2027, which totals 1,074 billion euros. There is no precedent for such a volume, more than 2.3 billion euros , that fast.
But the agreement has been historic, above all because of what was agreed. For the first time, the European Commission will go to the markets and raise up to 750,000 million to help with loans, but also with 390,000 in transfers. Not loans, but direct aid, which must not be repaid and which will not count towards the deficit or the public debt. Up to 72,200 million by that route for Spain, as Pedro Sánchez assured this morning very early.
But even if the European leaders reached an agreement, not everything is closed or everything is defined. It is not easy, it is not automatic and, this time, it will not even be all fast.
The first step will be the ratification of the agreement. The main voice will correspond to the European Parliament. The European Parliament has been largely ignored in the negotiation, although its approval is necessary and the deputies have approved several resolutions demanding forcefulness. They could hypothetically slow down the agreement, because it is less ambitious than they had claimed, in volume, in composition, in terms of the EU's own resources or that 'rebates', compensatory checks (and regressive) for the wealthiest net taxpayers.
Blocking is possible, but no one is counting on it. The agreement is broadly satisfactory and hard to imagine problems. "This is an unprecedented agreement between governments to revive the European economy. Now we have to work to improve the instruments. We are not giving up on a more ambitious budget and more clarity on own resources," the president wrote in his Twitter account. from the institution, David Sassoli.
Along the same lines, the chamber's negotiators have spoken, regretting that the so-called 'bridge option' has been ruled out so that this year there would be access to a significant amount of millions to alleviate the consequences of the virus. And warning that it cannot be taken for granted that the Plenary will endorse everything without further commitments.
Some analysts see it possible (or perhaps rather desirable) that the deputies make noise, that they force even a new Summit. It seems difficult, but the agreement has meant, in part not insignificant, to sacrifice programs of a European, inclusive nature. And if anyone can or is going to raise their voice, it will have to be the community institutions, because the capitals have saved their furniture to be able to agree.
The second step for ratifications is the voice that national parliaments may have (in Germany, Finland or the Netherlands, for example), but also, and here there are precedents, hypothetically in some regional ones. This is the case of Belgium, where the Chamber of Wallonia had a free trade agreement with Canada in suspense two years ago. Now, especially on the issue of own resources and new continental taxes, there could be some noise again.
The third point to note is that this is not an automatic process. Not when it is ratified. There will not be a morning in which Spain wakes up and Brussels has entered an account for 140,000 million euros. It is a long, complicated process, which involves paperwork, management, organization, discussions. It encompasses reforms, country commitments, dialogue with Brussels and with other European colleagues. Several evaluations, the fulfillment of various milestones and, only at the end, the disbursement. And it is not written anywhere that it will be everything that is available.
This is not like the 2012 bailout or that of other countries either. The system implies that each capital will have to make a National Reform Plan and send it to Brussels. It will be inspired by the Specific Recommendations that the Commission publishes every year for all the economies of the Union. It is an essential requirement. The money goes to projects, not to countries, regions or cities. It must be explained how it will be used to reform, modernize and adapt national economies. How the wounds of the virus will be closed, but also permeating everything with a green, ecological spirit, and betting on the constant digitization of the national economy.
Those plans are evaluated in Brussels, approved by the ministers of the 27 (that already happens every year, it is not a new procedure, it only changes that there is a related disbursement of funds). And when they get the go-ahead and get going, there will be a re-evaluation of what has actually happened and not just on paper. And a report by the Economic and Financial Committee, which is not binding but must be taken into account.
And if no one is wrong (and the Netherlands has kept a letter to itself so that it can block everything for months if it is not satisfied with its neighbors' reforms), then disbursements will begin. It will not be an easy task. Spain has some funds from the current Budget, from the 2014-2020 period unused, because they have to comply with certain requirements and processes. It is not money to buy light bulbs or build municipal sports facilities. They require an idea, coordination of administrations, presenting solvent proposals and thinking in the medium and long term.
Spain opts, in theory, for about 140,000 million euros, but in a very short time. 70% will be distributed in 2021 and 2020, in theory. And 30%, with other criteria updated according to the real impact of the pandemic on the economy, in 2023. It is very little time if there is no clear, coherent and coordinated plan. And there are serious doubts, in Madrid or in Brussels, that our economy, without large pending infrastructures, without AVE or highways to be built, has the capacity to absorb so much volume with so little margin.
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