Reconstruction in the EU: Skimping or padding to the Corona?

The Federal Chancellor of Austria, Sebastian Kurz had warned in recent days on the CSU-party conference, and in Interviews again and again in front of a "debt

Reconstruction in the EU: Skimping or padding to the Corona?

The Federal Chancellor of Austria, Sebastian Kurz had warned in recent days on the CSU-party conference, and in Interviews again and again in front of a "debt Union by the back door" in the European Union. On Saturday, he sent his proposal to Finance the economic reconstruction after the Corona pandemic to the rest of the heads of government in the EU. The two-page paper does not amount to a reconstruction Fund, but aims, in particular, that the aid should be limited to two years, and as the loans are paid off, not in the form of grants. The money for the reconstruction want to make Sebastian Kurz and his "saving seeds" allies, "frugal", the Netherlands, Denmark and Sweden, primarily through reallocations in the existing budget of the EU loose.

Merkel and Macron want to joint debts

France and Germany had submitted last Monday after a u-turn by German Chancellor Angela Merkel has a very different Plan. 500 billion should be financed, so Merkel and French President Emmanuel Macron, an "exceptional" by the joint debt through the EU budget and grants to Corona-damaged States will be paid. Until then, Germany had rejected a common fault recording always.

The alleged beneficiaries of this reconstruction Fund, Spain and Italy, were happy. They had already called in front of the Corona-pandemic joint European bonds, in order to rehabilitate its battered public finances.

But this is a step in a common European debt-to-community to avoid Austria's Chancellor soon. The promise of France and Germany, it was the fault recording for the "reconstruction tool" to a one-time exception, he will not believe it. "With all due respect, but these States are, of course, take advantage of every opportunity to make a further step in this direction and to consider it as only a first step, and to prevent it," said Sebastian Kurz, in the Germany radio.

Italy has Short handle

The claim of the "Thrifty Four" well-known group from Austria, Denmark, the Netherlands and Sweden, that the Corona-AIDS is considered as loans and repaid have to be met in the case of the Italian government, immediately on rejection. The move from Vienna was "inappropriate". In the serious recession, there was a need for "ambitious and innovative" proposals, wrote to the Italian Minister for Europe, Enzo Amendola on Twitter.

The disbursement of grants from the EU budget, as is the case with Merkel and Macron provided, would mean the net payers in the EU, i.e. the States that pay more into the pot than they receive, a significant increase in spending for the next 20 years. As long as the run should be times of the loans, which would include the EU.

Von der Leyen, it should direct

in The end it had to be a compromise, warned the Austrian Chancellor, Sebastian Kurz, in the Germany radio and pointed out that a European Budget and a building Fund would have to agree with all 27 member States, also the "Thrifty Four". On Wednesday, the EU will propose to the Commission their budgetary framework for the next seven years. To contain according to the announcements of the EU Commission President Ursula von der Leyen, a "reconstruction tool" in the amount of € 1000 billion (1 trillion) and thus have a smooth dual. Even von der Leyen puts on a joint Debt, but wants to achieve with the payouts a Mix of grants and loans.

The European Parliament has demanded in a resolution a building-Fund of € 2000 billion (2 trillion). The household must agree, in the end, the members of Parliament by a majority. According to calculations by the EU Commission, the EU and the 27 member States have mobilised to date, three trillion euros in emergency and economic aid. The construction funds would come in addition in addition, in order to stimulate the economy.

Many open questions and little time

voltage is now expected in Brussels, as the Commission wants to bring the conflicting camps within the EU under a hat. It is clear that the whole process must be accelerated, in order to have the money available that is needed to Boost the economy by the end of the year. In a joint analysis by experts of the economic policy think-tank Bruegel in Brussels, then, that the reconstruction should be financed with joint debt at the EU level. In addition, it is how and what the money eventually will be spent. The consequences for the fiscal policy of individual member States, for Fairness in the European internal market and the climate protection strategy would need to be taken into consideration.

To consider are the budget of the EU and of the potential Borrowing to the financing of the construction funds, the following questions: Is the Planned, legally permissible? Because the EU Treaty actually knows the prohibition of a Debt. Will there be at the end of the Corona-recession, still plenty of potent net contributors which Finance the EU budget? France and Italy are finally today a net payer, but should benefit extensively from the new Fund. And How the significant contributions of the former member, the UK will be distributed to the rest of the shoulders in the EU?

author: Bernd Riegert

*The article "reconstruction in the EU: Skimping or padding to the Corona?" is published by Deutsche Welle. Contact with the executives here.

Deutsche Welle
Updated Date: 23 May 2020, 15:26

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