The Heads of State or Government of the European Union will take stock on Thursday 23 April of the health and economic emergency measures taken at European level at a fourth European summit by videoconference since the outbreak of the COVID-19 pandemic in March.
In addition to coordinating national measures for gradually easing quarantine, the Twenty-Seven will discuss how to revive the coronavirus-crippled economy on the basis of a roadmap unveiled by European Council President Charles Michel on Tuesday evening. Centrally, the issues of a European Recovery Fund and its links with the 2021-2027 Multiannual Financial Framework (MFF), which are the subject of several proposals on the table (see EUROPE 12470/1), will be fiercely debated but will not be the subject of a final decision on Thursday.
There is too much uncertainty about the extent of the unfolding socio-economic crisis, which is often described as the most serious crisis since the end of the Second World War. Hence Mr Michel’s suggestion to ask the European Commission to carry out a mapping exercise of the sectors and regions most affected. The impossibility of holding summits in the physical presence of EU leaders further complicates negotiations on sensitive budgetary issues.
According to a European source, Thursday’s summit can be described as a “success”: – if the two roadmaps on the exit from the pandemic and the economic recovery are approved; – if the safety nets identified by the Eurogroup for States (European Stability Mechanism credit lines, €240 billion), people affected by short-time working (SURE instrument, €100 billion) and companies (EIB’s pan-European guarantee fund, €200 billion) are validated with the aim of being operational “by 1 June” (see EUROPE 12465/2) and; – if the discussions of the Twenty-Seven allow the Commission to “clarify the links” between the European Recovery Fund and the draft MFF, which will be the subject of a revised proposal at the end of April.
“There is no doubt that another summit will be needed” to reach agreement on how the EU will finance and deploy its recovery instruments, the source said on Wednesday 22 April. She imagined an agreement on a package including the 2021-2027 MFF and the Recovery Fund, whereas in the opinion of the President of the Eurogroup, Mário Centeno, the two elements should be dissociated (see EUROPE 12471/1).
Asked about a possible timetable, this source hoped for a conclusion in “June”, at a summit in Brussels, if health conditions permit.
Recovery Fund. One thing seems to be certain at the start of this fourth European Summit: the Union will equip itself with a specific budgetary instrument to revive the economy.
“My suggestion is that we agree to work towards establishing such a fund as soon as possible. It should be of sufficient magnitude, targeted towards the sectors and geographical parts of Europe most affected, and be dedicated to deal with this unprecedented crisis”, Mr Michel said in his invitation letter sent to his counterparts on Tuesday evening. He went on to say, “The Commission proposal [on the Fund] should clarify the link with the MFF, which will in any event be at the heart of the EU’s contribution to recovery”.
In his roadmap, the President of the European Council argues that the crisis, which is the result of an exogenous event, affects Member States symmetrically and the response must also be symmetric. Otherwise, the varied fiscal means available to the Twenty-Seven will create distortions within the internal market.
“There is agreement on the need for a Fund. There is no agreement on the size and terms of this Fund”, one French source from the Élysée Palace summarised. It is necessary “to first understand what it is used for before saying how much it costs”, the same European source said.
The whole negotiation will therefore focus on the size of the strike force of this Recovery Fund – with a scale of between €500 billion and €1,500 billion having been mentioned – and on the level of political and budgetary integration that its creation will entail.
Refusing to sign a blank cheque, countries such as Germany, the Netherlands and the Scandinavian countries are still refusing any debt pooling. Like the Commission, they favour a central role for the EU budget which could serve as a guarantee to raise capital on the markets.
According to El País, the Commission could propose to raise up to €1,600 billion on the markets itself to help recapitalise companies in difficulty and invest in strategic sectors.
In the camp opposite, nine Member States, including the countries most affected by the pandemic, are advocating a debt issue at European level for which they would be jointly responsible. They are of the opinion that the intergovernmental method would make it possible to move more quickly and decisively to raise the necessary funds. There is nothing to prevent these funds from being redirected to the EU budget and then redistributed to the most affected countries, in compliance with political priorities such as the European Green Deal and the digital agenda.
Another controversial issue concerns the form which the aid will take: grants, loans, both? “There is no agreement on a one-time grant”, the source said, referring to the Spanish proposal. But, for France, “it won’t be enough, if there are only loans”.
As Mr Centeno anticipated, the euro-area budget (BICC) to be put in place in early 2021 could be considered to finance the economic recovery, if its capacity for action were greatly enhanced.
We are ready to receive a mandate to refine our preparations for “a more ambitious MFF” as well as “an additional strike force in the form of a fund” or any other financial instrument that will “drastically” increase the level of investment to revive and modernise our economy, said Commission Vice-President Maroš Šefčovič after the General Affairs Council (see other news).
Roadmap. In his roadmap for economic recovery, which will be broken down into a detailed action plan, Charles Michel suggests four areas for action: – the revitalisation of the single market; – an unprecedented investment effort; – the EU’s responsibility as a global player promoting multilateralism in the management of global issues; – the search for greater efficiency in the functioning of the EU in the light of the lessons to be learned from managing the pandemic and without losing sight of the fundamental values on which the Union is based.
“The first line of work clearly raises the question of European sovereignty to be found in sectors of activity considered as strategic. The COVID-19 pandemic has shown the pressing need to produce critical goods in Europe, to invest in strategic value chains and to reduce over-dependency on third countries in these areas”, Mr Michel’s roadmap highlights.
See the Roadmap for Recovery: https://bit.ly/34WkxfT
Pandemic exit strategy. European leaders are expected signal their support for the roadmap for lifting the lockdown measures.
This roadmap was prepared jointly by Mr Michel and the President of the European Commission, Ursula von der Leyen. Presented on 15 April, it encourages Member States to coordinate when considering loosening lockdown measures and to take into account the views of their counterparts (see EUROPE 12467/2). It especially recommends a phased approach, taking into account epidemiological criteria, the state of the health infrastructure and surveillance capacity.
With the summer holidays ahead, European leaders should also address the issue of borders. Restrictions on entry into the EU are extended until 15 May and are likely to be extended again after the summer (see EUROPE 12471/10).
However, the Commission has not taken a position on travel within the Schengen area of free movement of persons, except in the roadmap on the lifting of restrictions, where it recommends coordination between Member States to ensure that the checks carried out are targeted and proportionate.
This is “a subject that falls within the competence of the Member States and where the Commission can give guidelines, but cannot do much more”, the European source said. The Twenty-Seven could set guidelines so that the segments within the EU Council – Home Affairs, Tourism – and the Commission could take action.
A small team of commissioners is developing “guidelines for restarting the travel and tourism for this season”, Transport Commissioner Adina-Ioana Vălean told a debate with internet users. (Original version in French by Mathieu Bion, Sophie Petitjean with Solenn Paulic and Agathe Cherki)