On the 21st of July, European leaders finally reached an agreement on a €750 billion plan to rebuild the economies of member states most affected by the pandemic.
Basically, the “Next Generation EU” fund authorises the European Commission to borrow in the capital markets on behalf of the European Union. This was achieved after four days of summit talks, where the so-called “Frugal Four” of Austria, Denmark, Netherlands and Sweden opposed the distribution of funding for countries such as Italy, in the absence of adequate economic reform to accompany the financing.
Essentially, the Recovery Fund could have been launched much earlier. But Italy, especially the opposition, was reluctant to accept the presence of Bruxelles in this deal, taking an anti-European stance. Salvini’s League, and also at the beginning Meloni’s Brother of Italy, were afraid of the “intrusion” of the Commission in Italy’s national economic agenda. Negotiations were also hindered by the frugal Netherlands, which was skeptical of Italian economic credibility and of Rome’s ability to manage funds. As an Italian, I personally feel that Dutch prime minister Mark Rutte was right, and that his country’s doubts were more than legitimate.
Nevertheless, the agreement was reached, providing for a solution of control that satisfies the Dutch desire for supervision of certain countries, like Italy. The mechanism will permit national governments to stop Brussels’ financial transfers to a country for a maximum of three months, by demanding a review of the signed commitments and obligations by the European leaders. The final decision will be reserved to the EU commission.
An agreement was also reached on the 2021-2027 multiannual financial framework (MFF), setting a budget of 1.074 trillion euros.
From Rome’s perspective, after being a primary reason for the project having been previously stalled, the pact was sealed with a moral victory for Italian Prime Minister Giuseppe Conte. After Conte had been roundly criticized by the opposition, he managed to secure for Italy a full 28% of the total funding, or 209 billion euros.
Repayment for the EU debt will start from 2028. This agreement, modified from the previous proposal made by Ursula Von der Leyden and the European Commission, has a different balance of grants and loans. The first proposal included 500 billion euros in grants, while the agreement reached this week has a lower proportion of grants: “just” 390 billion euros, with 360 billion euros in loans.
Want to know more about the EU Recovery Fund? Read here: https://newscoop.com/the-eu-recovery-fund-uniting-and-dividing-europe/