The European Court of Auditors crushes the theses of the Mes and Recovery Fund fans
What can be deduced from a report by the European Court of Auditors and the effects of the surveillance of the EU Commission on Mes and Recovery Fund. The in-depth analysis by Giuseppe Liturri
It has been underlined since time immemorial that the Mes has always been a trap to subject the unfortunate beneficiary country to close and reinforced surveillance.
That the Recovery Fund promises to be at least as dangerous, it was suspected, but we lacked concrete evidence to support it.
Punctually, on 20 August the European Court of Auditors (ECA) arrived to supply them in abundance, sweeping away a series of lies about alleged European solidarity. The modest spaces offered by the Treaties to provide financial aid for the Member States are overseen by instruments of control and protection of creditors, whose effectiveness must be tested precisely in view of a significant aid program such as the Next Generation EU.
The ECA aims to understand whether the post-program surveillance (PPS) tool to which 5 countries (Greece, Ireland, Spain, Portugal and Cyprus ) that have received financial assistance in various capacities after the 2008 crisis are currently subject have correctly worked and whether “it could be a suitable monitoring tool for the Recovery Fund currently under discussion ”. To leave no room for doubt, Alex Brenninkmeijer, the Member of the European Court of Auditors in charge of the audit, added that "now that the world economy is severely affected by the COVID-19 pandemic, it is important to know if the pillars of economic and financial architecture of the EU are solid and effective ”.
The Court sends a twofold message to the Commission:
- On the one hand, to verify that it has not been too soft and compliant in the implementation of the PPS towards the States already beneficiaries of aid;
- On the other hand, warn it, since the aid currently being negotiated will require much more attitude and corrective capacity towards the beneficiaries. From 2021, there will be no more talk of tens, but hundreds of billions.
The guardians of the European accounts want to be sure, in a not too veiled way, that, especially when it is feared that debtors may have difficulties, all debt collection tools are perfectly efficient.
To ensure that all countries are kept on a leash for the many years required to repay the loans, the ECA intends to begin an examination of the design, implementation and effectiveness of post-program surveillance for the five Member States. The Court will examine whether the Commission has drawn adequate conclusions from its assessments and taken, where necessary, adequate measures to enable these Member States to maintain a sound economic and financial position, and whether it has provided guarantees to creditors regarding repayment capacity.
In short, the ECA wants to verify whether the Commission has fully carried out its work as an inflexible hound also, and above all, in the future. These are the European rules, very often forgotten by the Europhanatic dreamers of Italy. So the novelty is not so much that European aid arrives, by definition, with conditions that generally generate recession, but that the Recovery Fund does not escape this rule and therefore threatens to bring more recession than development to our country.
The financial assistance we are talking about is that granted by various instruments (including the Mes) between 2009 and 2015 to the countries mentioned and first of all provides for a strengthened surveillance regime that can also lead to a macroeconomic adjustment program (the "Greek", so to speak). When the disbursement of funds ends, together with the fulfillment by the beneficiary of all the conditions set by the program, the PPS begins and ends when at least 75% of the debt is repaid. Thus, in fact , article 14 of Regulation 472/2013 provides which, with reference to the ESM loan for healthcare expenses, some politicians and commentators – perhaps not very comfortable with the concept of hierarchy of legal sources – consider not applicable only because two Commissioners UE have committed to this with a letter dated 7 May. Now the auditors are coming to remind us that Article 14 is so much a pillar of the European financial assistance mechanisms, that it must be polished, so to speak.
The thesis, advocated by the pro-Mes, of the absence of conditions for access to the loan, is entirely centered on the initial lack of an adjustment program, which is also possible, and on the simplification of enhanced surveillance until the completion of the disbursement of the loan. loan. On the other hand, the PPS is maliciously ignored, which is the most dangerous part (additional to the ordinary surveillance of the European Semester), also considering the ten-year duration of the ESM loan. Only the attention now reserved to the PPS by the European Court of Auditors would be enough to understand how this omission by the supporters of the Mes is very serious.
The Commission has a key role in this surveillance: it evaluates the budget, economic and financial situation of the debtor country and reports to the European Parliament and national Parliaments. It carries out two missions per year to the debtor country, from which it can request a lot of additional information on the accounts, the execution of stress tests or sensitivity analyzes on the resilience of the financial sector and an independent audit of public accounts. Not surprisingly, the same alert system used by the Mes , with which they carry out joint missions. If the Commission concludes that there are negative consequences for the financial stability of the state under surveillance or of the eurozone as a whole, it proposes to the Council to adopt recommendations with corrective measures that can go as far as a full-blown macroeconomic adjustment program.
In short, if we did not end up under the program with the Mes, we could easily end up with the Recovery Fund. An analysis of the sustainability of the public debt will be enough that requires us to return the debt / GDP ratio, now projected towards 160%, with an unacceptable speed for a government that does not want to massacre its citizens with taxes and spending cuts, and for us it will be the end of any residual autonomy of economic policy.
From the document of the Court, it is also clearly noted that the cycle of coordination of economic policies that goes under the name of "European semester" is considered an ordinary instrument insufficient to govern the extraordinary phase that we are about to go through, with the Commission debt for 750 billion on the markets.
With this also dismantling the thesis of those who do not see a particular danger in the surveillance connected to the Mes, according to which European surveillance would exist anyway. Instead, the Court makes a clear distinction between the different levels of intensity of surveillance of the Member States and places the PP at a more advanced stage than the European semester. At an even higher stage is the “Greek-style” macroeconomic adjustment program.
This is the toolbox, whose recessive potential we will never tire of pointing out, in which the EU is preparing to rummage to keep the beneficiaries of the Next Generation EU under control.
This bath of realism coincides with the publication of the minutes of the last executive council of the ECB in July , from which we learn that the 1,350 billion Pepp share purchase program is a ceiling more than a goal and that the prospect of an increase does not receive much support within the board. Not surprisingly, the latest data on weekly purchases under the APP program (from 20 billion monthly plus 120 from March to December) and PEPP, show consistent signs of a slowdown. For several weeks now, they have oscillated around 20 billion, compared to 40/45 in April and May. In July, the first program generated purchases for only 22 billion (against 51 in March), and the second, purchases in the two-month period June-July for 206 billion, compared to 235 in the previous two months. The ECB is aware that it cannot force its hand that much, because the ban on monetary financing of the public deficit, set forth in Article 123 of the TFEU, looms large.
When the smoke of propaganda and dreams has dissipated, it will be discovered that Europe's "aid" will only serve to commission us definitively and that the Treaties prevent the ECB from doing its job. But it will be too late.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/la-corte-dei-conti-europea-stritola-le-tesi-dei-fan-di-mes-e-recovery-fund/ on Sat, 22 Aug 2020 13:34:16 +0000.