Forced donation: why harmonization of the anti-crisis budget has caused controversy among EU member states

By Sunday evening, European leaders were not able to develop a common approach to EU anti-crisis financing - negotiations continue behind closed doors. The journalists were not allowed into the building where the negotiations are being held. The decision was argued by the threat of the spread of coronavirus infection. For the same reasons, the summit participants were ordered to reduce their delegations from the usual 20 people to six.

The summit of the heads of state and government of the European Union, devoted to the formation of the European budget, could not meet the originally announced deadlines. The organizers suggested that the meeting will be held during July 17-18, but the participating countries could not reach a compromise in two days. The debate had to be extended for another day - July 19th. On the eve of the negotiations on the eve of his Twitter announced a spokesman for the head of the European Council Barend Leitz.

#EUCO plenary has now ended @eucopresident will reconvene meeting tomorrow at noon pic.twitter.com/oTOiRqK1nN

As German Chancellor Angela Merkel said on the eve, the third day of negotiations was to be decisive. At the same time, the politician did not rule out that countries could not come to a common decision.

“There is a lot of goodwill. But also a lot of positions. And I will defend mine. But it may also happen that today we will not reach a result, ”Merkel noted.

• Angela Merkel
• Reuters
• © Francisco Seco

On the eve of the third day of negotiations, French President Emmanuel Macron noted that the agreement is necessary for the European Union, however, in his opinion, agreements should not infringe on the interests of individual participating countries.

“This is necessary because we are faced with an incredible health crisis, with an economic and social crisis. This is necessary both for our countries and for preserving a united Europe, ”the French leader emphasized.

Italian Prime Minister Giuseppe Conte, in turn, said that EU member states should come to an agreement on July 19, since delaying negotiations is not beneficial to anyone.

As Konstantin Voronov, head of the regional political problems and conflicts department of the IMEMO RAS Department of European Political Studies, noted in an interview with RT, the interest of countries such as France and Germany in signing the anti-crisis budget, within the framework of which it is proposed to allocate major assistance to the most affected states, is understandable.

“Germany’s export-oriented economy is based on foreign economic expansion. Berlin wants the southern EU countries to donate part of their sovereignty in exchange for financial assistance. Thus, the FRG is going to promote a European integration project, ”the expert explained in an interview with RT.

A similar point of view is shared by the deputy director of IMEMO RAS Alexei Kuznetsov.

“For Germany, EU countries are primarily profitable markets, for German business it is important that European countries have high purchasing power,” the expert explained in an interview with RT.

Financial split

The central point of the fierce discussion was the draft seven-year budget plan of the European Union for the period 2021-2027. The total amount of assistance can reach € 2.4 trillion. At the same time, € 540 billion of this amount has already been allocated from the European budget to support the affected citizens and businesses of the EU member states.

Disputes are currently ongoing regarding the remaining € 1.8 trillion. The share of the pan-European budget from this amount of funding should fall to € 1,074 trillion, another € 750 billion is planned to be raised to support the economies affected by the coronavirus pandemic.

• European Council President Charles Michel (far left), German Chancellor Angela Merkel (center), French President Emmanuel Macron (second right) and European Commission President Ursula von der Layen pose during a meeting at the EU summit in Brussels, Belgium, July 19, 2020 g.
• Reuters
• © Francois Walschaerts

From this package, € 250 billion is planned to be allocated to countries in the form of loans, another € 500 billion - in the form of grants. To receive funds, each recipient country will need to submit its own recovery plan, which will be reviewed and approved at the European level.

According to the text of the budget plan, the crisis that Europe plunged into because of the COVID-19 pandemic was the most serious crisis the EU has ever faced. The authors of the document note that often the discussion on anti-crisis measures focuses on how much each of the countries participating in the union invests in the general budget. However, at the same time, the benefits that all European countries derive from the existence of a common market are often overlooked.

Nevertheless, four countries - the Netherlands, Austria, Denmark and Sweden criticized the proposed plan and slowed down the adoption of the document. The authorities of these states insist on the need to either completely eliminate gratuitous grants from the plan, or to reduce their share.

They are opposed by the countries most affected by the pandemic - primarily Italy and Spain, which are in dire need of financial support.

“Our main requirement is that a long-term # debt union does not arise. Of course, we want to show solidarity, but we also need to remember the interests of Austrian taxpayers, ”Austrian Chancellor Sebastian Kurtz wrote on Twitter.

Unsere zentrale Forderung ist, dass es nicht zu einer langfristigen #Schuldenunion kommen darf. Natürlich wollen wir solidarisch sein, aber wir haben auch die Interessen der österreichischen Steuerzahler im Blick.

“Therefore, our position is that we categorically reject the current proposal for the # restoration fund, which provides subsidies in the amount of € 500 billion,” he added.

According to Konstantin Voronov, the disagreements that arose during the discussion of the budget have long-standing roots.

“European solidarity is based on the fact that successful countries pay for less economically successful countries. This is a long-standing, rooted problem, and northern Europe is tired of this situation, ”the expert explained.

A similar opinion is shared by Alexei Kuznetsov.

“The Netherlands, Austria, Denmark and Sweden are traditional donors within the EU, although they also suffered from a pandemic, as did Italy and Spain. The latter want to get as much support as possible. Donor countries intend to set tougher conditions. In general, economically weak countries during any crisis turn out to be a weak link in the integration project, ”the expert explained.

“Ship of the European Union”

Another stumbling block during the summit was legal issues. Western European countries require that one of the conditions for allocating funds be compliance by recipient countries with EU legal standards. This applies primarily to Poland and Hungary. Their authorities have long been in conflict with Brussels, which accuses Warsaw and Budapest of attacking the principles of the rule of law and separation of powers.

The main supporter of this approach is the Prime Minister of the Netherlands, Mark Rygge.

• Victor Orban
• Reuters
• © Eric Vidal

Amsterdam's demands outraged Hungarian Prime Minister Viktor Orban.

“I don’t know what the Prime Minister of the Netherlands has a personal reason to hate me or Hungary, but his attacks are very cruel, and he makes it clear that since, in his opinion, Hungary does not comply with the rule of law, it must be punished for this financially. This is his position, and it is unacceptable, since there is no official decision on the situation with the rule of law in Hungary, ”Orban said on the eve.

Experts say that the coronavirus pandemic was a serious test for the European Union and forced member countries to rethink the criteria for European solidarity.

“Donor countries are annoyed that supranational measures are increasingly intruding on national regulation. This is not liked by many countries. At the same time, everyone saw how the lack of solidarity in the health system showed very disastrous results when Italy did not receive help. By and large, all European countries are also interested in the speedy recovery of the entire EU economy, ”said Alexey Kuznetsov.

However, he believes that the split between the prosperous countries of northern Europe and the affected south is unlikely to deepen.

Konstantin Voronov, on the contrary, believes that the distance existing between the EU countries, as well as the economic lag of a number of EU countries, will only increase.

“This problem cannot be solved by subsidizing, transfusion of capital or deepening economic integration. European integration has ceased to effectively pull up the failed EU economies. However, with all this, the EU countries will again and again find compromises on controversial issues, although these consensus will still not be able to satisfy everyone. But no country will want to torpedo the ship of the European Union and European integration will continue one way or another, ”the expert summed up.