All the turmoil on the Recovery Fund
Alessandra Servidori's post on the Recovery Fund
We will know the whole truth of the negotiations on the Fund once things have been done and after the last institutional passage, that is to the EU Parliament, at the same time with the approval of the 2021-27 Multiannual Financial Framework to which the Recovery Fund is also connected.
But what we read in the newspapers is a small part of what happened in those hectic hours when Italy came out with a lot of money.
It is important to know that the payment of the first tranches of funds will begin with the entry into force of the new seven-year EU budget, with 70% of transfers in 2021 and 2022, the remaining 30% by the end of 2023. And in this period of time, the EU Economic and Financial Committee will monitor compliance with the mandate on the basis of the principles established by the agreement and the reform proposals approved by the Council. If one of the countries fails with respect to the agreed rules, the president of the EU Council will end the question on the table of 27, that is, the much discussed "emergency super brake" required by the Netherlands and the other so-called frugal countries.
For the resources to be allocated in 2023, some determinant and different factors will be taken into consideration with respect to those relating to the first tranche of funds, such as, for example, unemployment, criticized by the frugal because it is considered linked to problems prior to the pandemic, replaced in the last trance from the cumulative loss of GDP recorded in 2020-21, which will be calculated by 30 June 2022.
The Recovery Fund will be fed directly from the markets through bond issues by the European Commission. This means that EU commissioners will be able to exercise new financing powers that, until now, had only been entrusted to the European Investment Bank and the ESM.
For the first time, the Twenty-Seven have mandated the European Commission to borrow in their name for a large sum, and the new debt in common should induce Member States to create new European taxes in view of its repayment, even if the bonds will have maturities. different. However, the commitment is to repay them by 2058 and not before 2028.
Italy managed to wrest more than 81.4 billion euros in subsidies and more than 127.4 billion in loans , for a total amount of around 209 billion. All this will in any case impose on us forms of economic governance that are certainly more intrusive regarding the management of the resources made available.
It is understandable why the proposals on the contents that Italy must represent to the great Ngeu (Next Generation Eu) are pressing these days. These must necessarily activate growth and generate the right incentives for the business system which is fundamental for relaunching development.
We know well that we are among the countries most affected by the wave of Covid-19, and we will be the one who will benefit from the most substantial package of resources to cope with the economic and social difficulties that are on the horizon.
Followed by Sanchez's Spain, with a total of 140.4 billion, divided between 77.3 billion in aid and 63.1 billion in loans; then France with 38 billion in grants and no loans. An important share will also come to the benefit of Poland, with 37.7 billion as an appropriation and 26.1 billion in the form of loans and in support of the Hellenic economy, with 22.6 billion in grants and 9.4 billion as loans.
Even frugal countries will have substantial benefits: non-repayable aid is foreseen for Denmark, which will go to € 2.156 billion, Holland 6.751, Finland 3.460 and Austria 4.043. In this way, the countries of northern Europe have also wrested another important result from the negotiating table: more than 26 billion euros for the next few years, a higher share of about 7.8 billion compared to the previous one. We are talking about the “rebates”, the discounts to the contributions that the four countries (Austria, the Netherlands, Sweden and Denmark, together with Germany) pay, like all the other partners, to the European Union budget in the next financial framework 2021-2027. The two most uncompromising leaders, the Austrian Chancellor Sebastian Kurz and the Dutch Prime Minister Mark Rutte, in the last stages of the talks have succeeded in trying to wrest particular treatment from Brussels.
Many were the questions and claims of the Mediterranean states about the legitimacy of these discounts, so much so that it was even hypothesized a possible suppression of what many believe to be an inappropriate privilege. Indeed, rebates were a decisive argument in the negotiations on the Recovery Fund. On the approval of the emergency plan to save the fate of the whole of Europe, the Northern axis has had a rigid attitude towards the partners most in difficulty, and there has been strong tension aimed at reducing the scope of aid and making on the other hand, the advantages for themselves are greater. Taking into consideration the Danish case, for example, of its contribution to the EU budget, Denmark will receive back 322 million euros per year, while with the previous regime the amount of the discount was worth just 197 million. The same applies to Sweden, which obtained a greatly increased annual discount from 798 million to 1.06 billion.
The President of the Republic Sergio Mattarella rightly commented that a great and excellent job has been done in Brussels. There was no real mutualisation of the previous debt but a step forward in a sense of solidarity with respect to the funds that will be used for reconstruction.
In a very unstable and unpredictable international context, faced with an economic framework that needs to be reinvented, the new Europe that can be reborn thanks to the effects of the Recovery Fund could play an important role on the global political and economic chessboard.
For us, the funds that will arrive in the next three years are an opportunity not to be wasted, because it is the last to implement important reforms and to rebuild the fabric of strategic infrastructures. Furious criticisms are welcome if accompanied by intelligent proposals and especially if the government will be able to value them without the usual presumption of completeness and pre / electoral dispersion.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/blog/tutti-i-subbugli-sul-recovery-fund-le-bizze-dei-prepotenti/ on Mon, 31 Aug 2020 08:36:53 +0000.