Coronavirus as European integration tryout / News / News agency Inforos
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Coronavirus as European integration tryout

Europe attempts to break the financial deadlock

Coronavirus as European integration tryout

A EU summit has ended in Brussels. It took four days instead of the previously planned two. It was only late on Monday that EU heads of state and government finally achieved agreement on the community's budget plan for 2021-2027 and economic recovery following the coronavirus pandemic.

The current summit has almost made it into history for the length of its discussions. The record belongs to the five-day Nice summit between EU heads of state and government in December 2000. Notably, the present-day one has become the first face-to-face forum of EU leaders during the coronavirus pandemic.

The key extension reason was the desire of the 27 EU members to reach a compromise on the seven-year budget plan and the coronavirus pandemic recovery fund. The amount discussed these days is unprecedented as regards the entire EU history – almost €1.8 trillion. The EU budget itself should be €1.074 trillion. Besides, €750 billion is planned for creating a post-pandemic fund for economic recovery.

The EU is assumed to borrow this huge amount on the capital market and return it within 30 years, starting 2028. There are three ways for this: by reducing other expenses, by increasing the member states' contributions to the joint budget, or by using the EU's own resources. The latter particularly include customs duties, part of revenues from the Emissions Trading Scheme and the tax on internet giants, the introduction of which is however a yet unresolved issue.

It should be noted that the greatest controversy was brought about by the amount of irrevocable aid to most coronavirus-affected EU countries. The European Commission's plans to allocate €500 billion from the total €750 billion package by the virtue of grants and subsidies were opposed by the so-called "Frugal Four" as represented by Austria, Denmark, the Netherlands and Sweden. Mind you, these prudent and financially disciplined countries are uncomfortable about having joint debts with Italy, Spain, Portugal or Greece. In the end, the EU leaders agreed to allocate €390 billion for this purpose.

This is despite the "northern" countries' deep awareness that their intransigent attitude towards the Brussels-proposed anti-crisis measures may undermine the entire European idea from within. No wonder French President Emmanuel Macron called it Europe's moment of truth ahead of the summit. He assessed the situation in the EU as "an unprecedented health, economic and social crisis". According to the French leader, the only way to overcome it is a unified position on economic recovery and achieving technological, industrial and environmental sovereignty of the EU. But this is hardly in evidence so far.

By the way, Macron bashed the table early on Monday and threatened that France would rather leave the talks than sign a bad deal. The day before, he lashed out against Austrian Chancellor Sebastian Kurz, who left the audience where the talks took place to answer a phone call.

In the long run, most EU member states still supported the proposal by European Council President Charles Michel, European Commission President Ursula von der Leyen, German Chancellor Angela Merkel and French President Macron to precondition the allocation of European subsidies by respect for the rule of law. In their opinion, this is, among other things, motivated by Hungary and Poland's recent shift away from the relevant norms.

It should be noted here that the entire EU history is a history of continuous crises. But the union has always coped with those by fits and starts. And the heaviest challenge was naturally the UK's exit from the union (Brexit), which has yet to be addressed. However, every time the EU finds itself on the verge of collapse, its desire to preserve the union's advantages, primarily the single market, prevails. This time, the EU leaders' common sense has ultimately prevailed either.

At the same time, it is clear (and the summit has become yet another proof of this) that the European Union has approached the line where it needs to fundamentally change the principles of integration. It's been clear long since, well ahead of the coronavirus pandemic, and COVID-19 only stressed the need for change within the EU. Before that, Brussels took pains to pretend this was unessential, but things didn't work out that way. Today time has apparently come to take care of this finally.

Speaking about the current EU summit, it must not escape our attention that the European press does not blame Russia for the current EU crisis. Brussels did not apparently receive a relevant command from Washington. The US is concerned about its own stacks of problems and does not give a second glance to Europe's internal disagreements. Although it is high time for the EU countries to determine their own policy towards Moscow. Especially given that the EU-Russia relationship is the one between two major geopolitical players.

Yes, the interests and values of Russia and the European Union conflict in a lot of ways. But despite this, both sides deem their economic cooperation as vitally important. This arises from geographical proximity and the fact that the EU is the biggest consumer of Russian gas, and Russia, in turn, buys most of the high-tech equipment for its oil and gas industry from the European Union. Suffice it to say that the 2019 foreign trade turnover between Russia and the European Union countries nearly reached $278 billion. Moreover, the parties are engaged in quite a number of successful joint projects.

Some EU countries also apparently apprehend Europe's need to be friends with Russia. German Foreign Minister Heiko Maas said this last Monday, particularly stressing that Europe needs Russia and needs to communicate with it, as well as to solve various conflicts like those in Syria and Libya. After meeting with the Baltic States' Foreign Ministers in Tallinn, he stressed that apart from sanctions and their extension, relations with Russia imply cooperation with Moscow.

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