The keys to the European Union recovery fund
After more than 90 hours of negotiations, the EU summit in 2020 has already become historic. European leaders have agreed to issue a joint debt of 750 billion of euros to revive the economy. The main stumbling block to this recovery fund has been the conditionality of aid and the distribution of this aid. The terms of the final agreement differ somewhat from the initial proposal launched by Brussels, which included 500 billion in non-repayable grants for those countries hardest hit by the pandemic, and 250 billion in the form of soft loans. Pressure from the northern partners has taken the weight off direct transfers, which remain at EUR 390 billion. The other part of the fund will be released in the form of soft loans.
While the northern countries, led by the Netherlands, were in favour of demanding reforms in return for money, Spain, Italy, Germany and France have opted for non-repayable aid. The pact has come after four days of marathon negotiations in which the only thing that seemed to unite everyone was to disagree, although European leaders can boast that there has been a happy ending.
Unlike in the last financial crisis, the EU has set its entire machinery in motion much more quickly and has achieved an agreement in a short space of time. "We have shown collective responsibility and solidarity, we have shown that we believe in our common future. This agreement is a clear signal that Europe is a force for action. This pact comes at a crucial moment in the European journey. It is the first time in history that our budget is linked to climate targets. That respect for the rule of law is a necessary condition. The magic of the European project works thanks to cooperation, the will to work together, to overcome difficulties, the ability to face everything together," said Charles Michel, President of the European Council and one of the coordinators of the meeting, at a press conference.
For the President of Spain, one of the beneficiaries of this recovery fund, Europe has shown that it is capable of opening up new paths. "It is not only one of the longest European summits in history, it is also a historic day for Europe," said Emmanuel Macron, the French President. "It is a great agreement for Europe and for Spain. One of the most brilliant pages in European history has been written. It is a real Marshall Plan", said the Spanish President Pedro Sánchez. During this summit the budget of the European Union for the period 2021-2027 has also been agreed, which will be a little less than the previous one due to the departure of the United Kingdom from the community club.
The negotiations in Brussels these four days have been charged with aggression and reproach. Over the weekend the meetings went on forever and the long-awaited agreement seemed never to come. The northern partners have played hardball and have not given up. France and Germany did not want the direct transfers to be less than 400 billion euros. In the end, they stayed at 390,000, something that the "frugals" considered acceptable in the end.
The ratification process is now open, as the agreement has to be approved by the European Parliament. For months, MEPs have lobbied and passed resolutions calling for ambition. The House was in favour of a larger and more ambitious package, with a greater number of transfers, a much larger Budget.
The EU's main resources are national contributions and it barely collects from certain customs issues and VAT. The idea for the next seven years is to collect more thanks to elements such as a tax on plastics and the possibility of border tolls for carbon emissions. The aim is to use the money to pay interest and the capital of the debt that the EU is going to issue on the markets to finance its plans.
