At this time of pandemic crisis, intergovernmentalism is inexorably regaining its hold on the conduct of European affairs. And the European Parliament is the big loser in developing emergency measures to deal with the current COVID-19 pandemic and the looming socio-economic crisis.
While the Eurogroup was invited on Tuesday 7 April to identify for the European Council new options to complete the arsenal of measures already taken (see EUROPE 12463/1, 12462/1), several preparatory meetings took place between presidents of European institutions – European Council, European Commission, ECB – excluding the President of the European Parliament, David Sassoli.
The image of the unity of the institutional triangle displayed during the ‘pilgrimage’ to the Jean Monnet house on the eve of Brexit appears to be put back in the cupboard (see EUROPE 12416/1). According to the newspaper El País, the fault lies with Germany and the Netherlands, which rejected the Spanish idea of a new report by the ‘five presidents’ on the measures in preparation. Both Member States are concerned that Mr Sassoli, an Italian Social Democrat, is tilting the balance of power towards a mutualisation of sovereign debt, which they reject.
Despite the obstacles to parliamentary work posed by containment, MEPs want to make their voice heard by adopting a legislative resolution on a comprehensive European response to the crisis on Thursday 16 April.
The pro-European political families are arming themselves with weapons before their respective presidents are charged with negotiating a draft resolution. On budgetary and financial issues, a convergence of views in the European Parliament is expected on three elements, namely: the activation of the European Stability Mechanism (ESM) with minimum trade-offs, the creation of the SURE instrument for unemployment reinsurance and the creation by the EIB of a pan-European guarantee fund for companies.
The level of ambition will focus on the issue of mutualisation of sovereign debt.
EPP. On Tuesday, the Christian Democrats in Parliament unveiled the results of their work on a ‘European Solidarity Pact’. In the face of what is needed for the economic stimulus valued at €1 trillion at EU level (three times that amount if national contributions are taken into account), they advocate “activating all existing tools to ensure financial solidarity and developing new commonly-funded financial instruments and sources of income which have sufficient size and long maturity to be fully efficient”.
The EPP group believes that an anti-coronavirus solidarity fund could be set up. Its intervention capacity would be “at least €50 billion” (€20 billion in grants outside the ceilings of the Multiannual Financial Framework and up to €30 billion in loans) to support national health systems.
See the EPP Solidarity Pact: https://bit.ly/3e1DLFd
Renew Europe. In the centre right, the Renew Europe group tabled a draft resolution on a European response to the pandemic on the same day. On the financial side, it asked the Commission to present a “massive” action plan, which goes beyond what has already been agreed. The temporary package of measures would be financed by a strong EU budget, existing EU funds and ‘recovery bonds’ “guaranteed by the EU budget”. It should “not lead to a pooling of existing debt and should be oriented towards future investments”, the text adds.
This paragraph of the draft resolution required “a lot of work” to be written, according to one parliamentary source. According to a second source, the message is to have “rather a tool based on the Community method” which could also benefit from guarantees from the Member States, like the SURE instrument. It stressed that Renew Europe had done everything possible to avoid using the word ‘coronabonds’, an expression banned in the EPP group.
“We want a stronger Union to emerge from the crisis, so all possible instruments must be pooled to shape a massive economic recovery”, the centre-right group’s chairman said in a statement. Dacian Cioloș, which will bring together the European leaders of its political family on Friday, had recently called for a relaunch of discussions in the EU Council on the legislative proposal to create a market for sovereign bond-backed securities (SBBS) (see EUROPE 12450/11).
See the draft resolution from Renew Europe: https://bit.ly/2JKVFxQ
S&D. The S&D group has long advocated a form of pooling budgetary risks in Europe. "We have frequently suggested the issue of Eurobonds”, but we recognise the difficulties that some Member States have in being jointly responsible for debts whose use would not be supervised by their respective national parliaments, Spanish Social Democrat Jonás Fernández, coordinator of the Social Democrat group in the Parliament Committee on Economic Affairs Committee, told some journalists on Monday 6 April.
He advocated the creation of a temporary fund capable of issuing European debt, modelled on the European Financial Stabilisation Mechanism (EFSM) used to provide a bridging loan to Greece, which was at risk of defaulting in July 2015. But this new fund would have its own resources (new VAT revenue, digital tax or corporation tax).
Integrated into the EU budget, the temporary financial facility would finance economic recovery while avoiding the pitfall of “democratic legitimacy”, as it would be supervised by the European Parliament and the EU Council, Mr Fernández stressed.
See the S&D group’s proposals: https://bit.ly/2JOcTdL
It should be noted that SPD MEPs are not opposed to a common form of issuing financial products to promote ecological and social modernisation. But this role should be played either by the EIB or the MES, they said.
“We need a true EU instrument that could be also supervised by the EU Parliament. This fund could be earmarked for the recovery plan. It should be permanent”, said Udo Bullmann on Monday.
See the SPD’s proposals: https://bit.ly/2wTVPQS
Greens/EFA. The Greens/EFA group proposes the creation of a ‘coronavirus’ fund capable of raising up to €1,000 billion in capital and which takes up some elements of the French proposal (see EUROPE 12460/6). But the document signed by several Green MEPs insists on the need to involve Parliament through the co-decision procedure.
Without mentioning the stabilisation function, the fund would allocate the sums mobilised to Member States according to the impact of COVID-19. But the national contribution to the fund, in the form of annual payments, would vary according to each country’s GDP. The Greens/EFA group also suggests that new own resources (digital tax) should be added to this fund.
The Commission, which would oversee the fund, would agree with the Member States on eligible expenditure. These should primarily finance the fight against the pandemic and ensure financial and economic stability while being in line with the Paris Climate Agreement and the EU’s climate objectives.
“We propose a real leap forward, with a debt pooling instrument or ‘coronabonds’ to finance public spending for at least 2 years”, said Karima Delli, in a statement.
See the Greens/EFA group’s proposal: https://bit.ly/3ec1Id4
On Monday, the European Green Party also launched a citizens’ petition to put pressure on the Eurogroup to introduce ‘coronabonds’. See: https://www.tilt.green/coronabonds
GUE/NGL. For the far left group, the mutualisation of Member States’ public debt is part of the European response to the socio-economic crisis. “We need ‘coronabonds’ backed by the ECB to ensure member states can respond to this crisis in a sustainable way”, said Martin Schirdewan, co-President of the group, in a statement.
However, the GUE/NGL group is rather of the opinion that the ECB, as lender of last resort, is the key institution for meeting the necessary budgetary needs and for avoiding speculation against the debt of weakened countries. He does not believe in ESM lines of credit without consideration.
See the GUE/NGL action plan: https://bit.ly/2QxkzoO (Original version in French by Mathieu Bion)