The fourth summit by videoconference of the Heads of State or Government of the European Union since the outbreak of the COVID-19 pandemic was clearly not the scene, on Thursday 23 April, of the confrontations observed during the previous summit (see EUROPE 12455/1).
After 4 hours of discussion, the Twenty-Seven validated Mr Michel’s roadmap for reviving the European economy to match the unprecedented socio-economic crisis that is taking hold (see EUROPE 12472/1). They, above all, defined a framework for the creation of a new financial facility whose intervention capacity, based on the 2021-2027 Multiannual Financial Framework (MFF), will approach “€1 trillion”, according to the President of the European Commission, Ursula von der Leyen.
This framework reinforces the first avenues identified by the Commission (see EUROPE 12473/2) and the position of Member States (Germany, the Netherlands) which refuse any debt pooling. The Twenty-Seven are only responsible for their national contribution to the EU budget. Common EU debt bonds with joint responsibility advocated by nine Member States (including Italy, Spain and France...) are therefore no longer an option.
While the Commission is asked to clarify the exact link between the Resolution Fund and the post-2020 MFF, the proposed European Recovery Fund is expected to use a budgetary technique already tested with the ‘Juncker’ investment plan. A public guarantee from the EU budget and the Member States is reportedly being set up to leverage huge sums of money on the capital markets. The funds raised in this way – at low cost, thanks to the Commission’s AAA financial rating – will then be redirected, via the EU budget, to the States.
Welcoming the request of the Twenty-Seven to explore “innovative financing instruments in relation to the MFF”, Ms von der Leyen confirmed that the Commission will propose to raise the own resources ceiling of the EU budget “to 2% of GNI instead of the current 1.2%”. A unanimous decision by the Twenty-Seven is required.
The funds raised will be allocated to the business sectors and territories most affected by the pandemic following a mapping exercise to be carried out by the Commission. According to Ms von der Leyen, there will be a specific recovery programme which will form a “package” with the MFF, and which will be divided into four areas: – cohesion and reforms; – the implementation of the European Green Deal and the Digital Agenda; – the common response to crises; – and aid to non-Member States.
“It will be a Recovery Fund with common European bonds that will finance the most affected countries, including Italy”, welcomed the President of the Italian Council, Giuseppe Conte.
The objective is to promote a recovery that respects the integrity of the internal market. Ms von der Leyen pointed in particular to the “enormous differences” in the scale of national public aid mobilised.
The modalities of the aid must still be negotiated, as well. How much of this will be in the form of grants, which do not burden national public finances, or repayable loans to reassure net contributor countries?
Dutch leader Mark Rutte and Austrian leader Sebastian Kurz have called for loans. “The answer is not for Europe to go into debt to make loans to countries, because these loans will be added to the debts these countries already have”, French President Emmanuel Macron said.
“Both have their advantages and disadvantages”, Ms von der Leyen noted. She also acknowledged that the option of a bridging solution was put forward with a view to mobilising additional budgetary resources as early as 2020.
“This Recovery Fund must be closely linked to the next MFF”, said German Chancellor Angela Merkel. And she added, For Germany, this means that we have to expect higher contributions for the next budget. This is how it is and it is a good thing”.
It is now up to the Commission to draw up concrete proposals for the Recovery Fund and for a strong 2021-2027 MFF, which, according to the President of the Commission, will take place “in the 2nd or 3rd week of May”. Some, on Thursday evening, even mentioned the date of 6 May.
While the Eurogroup will meet in 2 weeks’ time to resume its work on economic recovery, it is not clear at this stage when the Twenty-Seven will convene to take stock. “We don't know when it will be possible to meet again in person. [...] We will see which outcome is realistic without a physical meeting”, Mr Michel said. For Mr Rutte, it is “almost unthinkable” to negotiate such complex issues remotely.
See Mr Michel’s conclusions: https://bit.ly/2S2t8IP
Finally, the safety nets identified for States (ESM credit lines), people affected by temporary unemployment (SURE instrument) and enterprises (EIB pan-European guarantee fund) are expected to be operational by 1 June (see EUROPE 12465/2).
And the European strategy for a gradual exit from the lockdown imposed almost everywhere in Europe has been validated. “We are following the situation closely, in particular as the holiday season approaches, to ensure a gradual and orderly lifting of restrictions”, said Mr Michel.
Western Balkans. On another note, the President of the European Council announced the holding of an EU/Western Balkans Summit by videoconference on 6 May “in order to express what our priorities for this region are”. This was originally scheduled for 7 May in Zagreb (see EUROPE 12463/16).
Ms Merkel spoke of “a small consolation prize for Croatia”, which has made the European perspective of the western Balkans a priority of its six-month EU Council Presidency (see EUROPE 12397/3).
Turkey. Faced with the ongoing illegal Turkish drilling activities in the Cypriot Exclusive Economic Zone, EU leaders reiterated their full solidarity with Nicosia. They reaffirmed their previous conclusions calling for an end to Turkish actions and for restrictive measures against those involved in such drilling (see EUROPE 12279/3). (Original version in French by Mathieu Bion with Camille-Cerise Gessant and the editorial staff)