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MFF and Recovery Fund: Brussels should be ambitious

21 May 2020

EU vs COVID-19 The increasingly asymmetrical crisis compels Brussels to safeguard the single market, thus avoiding losing businesses and jobs. The Commission is called to present the most ambitious proposal, avoiding mediations.

Saving the economy and human lives will never be priced

European Union recently celebrated the 70th anniversary of the Schuman Declaration: what remains of that vision? And will EU be able to transform COVID-19 from crisis into opportunity to relaunch the integration process? 

These questions were at the heart of the round table "EU vs COVID-19 From crisis to opportunity to strengthen the European organization?" promoted by the European Parliament Office in Italy and by the Representation in Italy of the Konrad-Adenauer-Stiftung.

The meeting started from a surreal fact: the current crisis has seen a prompt and quick response from Europe. Yet, in the perception of citizens - especially in the countries of Southern Europe - the EU is not doing enough.

On EU budget and Recovery Fund Brussels should be ambitious

A vicious circle that can only be interrupted by taking clear positions. 

Recovery instrument will be funded through a larger headroom: “this headroom fixes the maximum amount of money, that the Commission can borrow on the capital markets with the guarantee of the Member States”, Ursula von der Leyen said.

“The bulk of the money will be spent within this first pillar, on a new Recovery and Resilience tool - created to fund key public investment and reforms aligned with our European priorities”.

Pietro Benassi, former Italian Ambassador and now Diplomatic Adviser to Italy's PM Conte said: Recovery Fund is important “for his mission, to safeguard the single market, and his size”, which should be “at least equal to ECB’s monetary ‘bazooka’”.

“The European Commission is called upon to make a proposal as ambitious as possible” without carrying out “a mediation”. The negotiations "are done in the Council, we should avoid double mediation", he said.

Italy insists on the grant component of the Recovery Fund, and above all on drawing up a European budget that is not "business as usual, but which takes into account the Covid-19 crisis".

“The Recovery Fund has been recognized as necessary and urgent. Furthermore, being connected to the Multiannual Financial Framework, it must have a certain amount of financial resources available before 2021. The future of Europe is today, there is no margin of error, there is no margin of time”. 

There is no mistaking now

Error is not allowed, stressed ex-premier Enrico Letta, currently president of the Jacques Delors Institute - Notre Europe. "Recovery Fund must combine two sources of financing: bonds issued by the Commission and the contribution from MFF, which is essential".

And there is a debt issue to solve: “All European countries will find themselves with 10-20% more debt: if there is no way to classify this increase in debt, it will prompt a downward spiral”.

Downward spiral that European Union is already experiencing. “A profound contradiction is emerging - Letta remarks - the European response to this crisis is much better than 10 years ago". Yet, it collides with two ongoing dynamics: "on the one hand, dramatic economic forecasts for all of Europe, and in particular for Southern Europe; on the other, citizens are losing faith in Europe".

A contradiction that leads Italians, according to a recent survey, to consider countries like China, Russia and the USA as "friends", rather than European countries.

“This is because we have two crises behind us: the economic one in 2008 and that refugees crisis. Italians have had the perception that, in both crises, the European countries have turned their backs on us. Today, the third crisis finds a social and political body in difficulty, and it turns into a growing anti-Europeanism. We must be very determined not to make mistakes: there can be no room for error this time".

Single market, social and territorial cohesion are at stake

“A symmetric crisis is becoming asymmetrical: Europe has acted robustly to guarantee solidarity. But the stability of the internal market and social and territorial cohesion is at stake”, Carlo Corazza, head of the European Parliament in Italy, said.

"This crisis shows how the European building is solid but incomplete: it must be transformed into an occasion for the completion of European construction".

To do this, he added, we need to look forward: "We need a robust budget, not only to respond to the crisis caused by Covid-19, but also to respond to future challenges", like climate change and digitalization. “We need carbon tax, taxation of speculative financial resources. We need our own resources and treaty changes: we need a fiscal, economic and political union, we need a European Parliament with a stronger role to protect the interest of our citizens".

The Italian-German dialogue

According to Caroline Kanter, Director of Representation in Italy Konrad-Adenauer-Stiftung, “we have to look forward, leaving behind misunderstandings. A strong and self-confident Europe is needed", In this context, the dialogue between Germany and Italy plays a key role.

At the beginning of this crisis "there were misunderstandings in the relations between European countries, but we got through them and we understood that only united we are strong", Andreas Schwab, MEP of the CDU - EPP Group, said.

Marian Wendt, Member of the Italian-German Parliamentary Group, President of the Petitions Commission, Bundestag, said: “we have learned that we can only move forward together in Europe. We now have a greater awareness of Europe and we must continue to address concrete issues: find financing solutions for the economy and the health system. Germany is willing to help substantially".

A solution proposed by Wendt is to drastically speed up "the administrative process for accessing Recovery Fund’s resources, making sure that these will reach the beneficiaries directly: if we manage to make this mechanism work, the perception that citizens have of the EU will also change" .

At the same time, Europe must become "independent of the Chinese market" and to do so "we therefore need a common market”, he ended.

Antonio Tajani, President of the Institutional Affairs Commission of the European Parliament agreed on this point: "to protect our interests, including economic ones, we will have to deal with Russia, China, India. So we have to strengthen the transatlantic alliance with United States".

"We need a political strategy: the first major reform is political Europe. Either we do it all together or we’ll never be anything more than marginal”, Tajani underlined.

He recalled the document drawn up by Confindustria, BDI and Medef to address the economic and social shock caused by the coronavirus emergency: "The EU must mobilize to support industry and real economy. We can only do this through the Recovery Fund. European Parliament insists on the role of the Recovery Plan to support real economy through loans and contributions. And we’ll have to use also SURE, EIB and ESM".

The role of information to overcome the short circuit on the perception of Europe

According to Giampiero Gramaglia, Journalist, former ANSA Director and correspondent from Brussels, two moments of this crisis should have build a better idea of Europe: “the first one was linked to the health crisis, during which we felt the lack of European action, because the EU has no powers in health sector; the second moment is connected to the economic impact of this crisis: Europe has done faster and more than in the past".

"Yet Italians have the impression that they received more help by countries that have sent doctors and intervention tools. But it is not comparable to the billions mobilized by the EU through SURE, ESM and Recovery Fund ".

Information is partly responsible for this contradiction, he added. But at the same time "the background noise of Italian political debate sometimes prevents us from hearing the clearer sound of the European intervention". The important thing now is not "getting bogged down in European debates and long term decisions”.