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Read, Debate: Engage.
| topic: | Good Governance |
|---|---|
| located: | Germany, Italy, France, Spain, Netherlands, Poland, Hungary |
| editor: | Gurmeet Singh |
It took four days of heated debate (with masks on), several tantrums, and one or two lengthy sidebars about relatively unimportant minutiae, but EU leaders managed to agree on a joint financial package to help EU nations out of the Coronavirus recession.
"To fund the €750 billion recovery plan, the European Commission will borrow on financial markets on an unprecedented scale, marking a step towards deeper integration hailed as historic,” writes The Guardian.
However, this so-called “historic” deeper integration conceals the troubles which have plagued the bloc during the previous few months, if not, the last decade. That is, the EU has once again tried to solve its political and cultural problems, through economic means.
The Guardian continues:
“Some northern European countries have long accused southern Europe of failing to carry out necessary reforms to protect their economies from a crisis.
Italy and Spain, among the hardest hit by coronavirus, accused those northerners of putting in jeopardy the EU project by failing to show solidarity in a pandemic not of their making.
Western Europe is worried about what leaders there see as sliding democratic standards in Hungary and Poland, as those governments take steps to restrict judicial independence. The EU’s “old” member states argue no country should get EU funds without respecting basic democratic values. Hungary and Poland say they have done nothing wrong, accusing the westerners of being arbitrary.”
When Coronavirus first gripped Italy, sending the entire nation into lockdown, the EU was slow to act, with Northern European nations, particularly the Netherlands, stalling over assistance. This helped engender the feeling that the EU was not living up to its own values, and even refusing to act out of solidarity. What’s more is that the recovery package is itself controversial as it tries to resolve what the Carnegie Endowment for International Peace calls, “an unclear hierarchy of powers”.
“The fund entails issuing mutual debt, meaning that the EU will borrow the funds from the financial markets and hand those funds out to individual member states in the form of grants and loans. The debt will be paid back from the common EU budget and through a new tax the commission is authorized to collect, making this joint recovery effort a controversial step toward fiscal integration.”
In other words, the EU already has the monetary policy and interest rate-setting powers, but individual member states have hitherto decided how their citizens should be taxed. The latter is now one step closer to being within the EU’s power. This may indeed lead to greater political integration, but it seems likely that it will hand the populist-nationalists in Poland, Hungary and elsewhere more power: “who runs the country? Us, or the EU?” This conflict is likely to cause further tensions in the coming months and years, especially as the EU will face further crises, including a projected new migration crisis, due to coronavirus.
One positive aspect of the deal however, is its proposed “Green” elements. “To repay investors, EU member states have agreed to create new common taxes, including a plastics levy that will be introduced in 2021. The commission, which drafts EU law, has been asked to propose a levy on polluting imports from non-EU countries, as well as a digital tax. But agreeing on these taxes will not be easy, so there is no certainty about how the EU will repay its debts yet.
Nearly one third (30 per cent) of the budget and recovery plan will be targeted towards the EU goal of reducing carbon emissions to net-zero by 2050. Environmental campaigners have previously complained of a lack of detail, claiming that polluting industries, such as aviation, will still have access to stimulus funds.
In a partial victory, Poland will still be able to access half the money available in a green transition fund without signing the EU pledge of net-zero emissions by 2050.”
Indeed, while it seems like a major success, the true political problems of the EU project, namely the Northern nations’ dominance over the South, and the East’s populism, seem to have simply been postponed, rather than solved.
