EU’s latest agreement is step in the right direction, but devil is in the details
Written by Stephen Moynihan
The European Union agreed to a landmark deal in this week’s summit, which includes mutualisation of debt. However, this does not tell the whole story.
5min Read
Written by Stephen Moynihan
5min Read
The European Union agreed to a landmark deal in this week’s summit, which includes mutualisation of debt. However, this does not tell the whole story.
The heads of states of 27 European Union members states agreed to an €750 billion deal as part of a package known as NextGenerationEU this week, which will deal with the fallout of the COVID-19 crisis. The mutualisation of debt within this package is to be welcomed, and can play a role in creating a more equitable Europe. However, the insistence of “frugal” nations such as Netherlands and Sweden to place a greater emphasis on loans rather than grants may hamper this equitable transition.
The role of increased rebates to these “frugal nations” in exchange for their acquiescence to the deal is also problematic, indicative of the parish-pump style politics extended to a national level on the European stage. Most troubling is the changing dynamics of the package, which has seen huge cuts to the just transition and research funds respectively, which could be troubling for Europe’s environmental sustainability going forward. Cuts to rural development grants will also hamper fair regional development going forwards, along with massive slashing of InvestEU funds, which are designed to kickstart the EU economy.
The changes to the program as originally envisioned are outlined in the tweet below.
⬇️Here is a comparison of program allocations as per the original proposal and the current deal. While the grants in the Recovery Fund (RRF) has been preserved, the cut in grants has concentrated on programmes that would have financed truly European public goods. 3/ pic.twitter.com/0bAMZFCzMy
— Silvia Merler (@SMerler) July 21, 2020
One must question the commitment to an equitable European Union from these “frugal” nations, whose comments have sometimes harkened back to the racial undertones seen in the financial crisis following 2008. The presentation of a dichotomy between a prudent North and a spendthrift South have been prevalent in the run up to this summit, and indeed this narrative has been at least implicitly promoted by Prime Minister of the Netherlands, Mark Rutte.
This agreement is a positive step for the European Union, but efforts must be made to ensure the “frugal” nations do not hold the rest of the EU hostage to their self-interested preferences. A fair and equitable EU is of paramount importance going forward, otherwise the future of the European project is at risk.
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