Now or never for the European Union' rescue plan

The most difficult thing now is to convince the citizens of the so-called "frugal four" countries - Austria, Denmark, the Netherlands and Sweden - of their kindness when transferring their savings to the cheerful money wasters of the south, embodied especially in Italy and Spain. Yes, the President of the European Commission, the small but energetic Ursula von der Leyen, has illuminated what is probably the only possible reconstruction plan, trying to reconcile the pressing needs of southern Europe with the alleged greedy opulence of its northern half. In the middle, as the great inspirer of the plan, but also as a future great contributor of funds, the Germany of Chancellor Angela Merkel, without a doubt already a historic political figure, who does not deserve the giants that laid the foundations of the European Union, its hopeful system of values and its longed-for and envied prosperity. 

The proposal is to put EUR 750 billion on the common table, including EUR 500 billion in transfers and EUR 250 billion in loans to alleviate the coronavirus crisis. Of that total, the largest beneficiary would be Italy with 172 billion, followed by Spain with a second prize of 140 billion.

In order to reconcile the demands of the south for such a shower of millions in non-repayable funds with the demands of the north for loans to be repaid with their corresponding requirements, the Commission has produced a work of socio-financial engineering that is at least original and commendable.  

In addition to other items, the aforementioned 750 billion will be added to the EU's common budget, which means, to begin with, practically doubling the meagre 1% of national GDP that the EU member countries have hitherto contributed to the Member's treasury. That is to say, from the current EUR 1.1 trillion to EUR 2.4 trillion. It is certainly not something to celebrate, but it is an important step, mostly because it breaks the deadlock on which the richest members of the club have hitherto been leveraged, including of course the United Kingdom, the biggest critic of granting Brussels one more penny, a synonym, in its view, for giving up sovereignty to Brussels bureaucrats.

Risk pooling through the back door

The inclusion of the EUR 750 billion earmarked exclusively for recovery policies in the Community budget therefore amounts to a mutualisation of risks through the back door, and to the corresponding demands on those reputed big money spenders to apply the fiscal rules quarantined because of the virus: a limit of 3% of the deficit and a reduction of the debt to 60% of GDP, which, with exceptions, were flexible and even broad-based until the spread of the Covid19.

The money that arrives in both Italy and Spain will therefore have to be subject to the supervision of the Commission, which guarantees the good end to which these funds are destined. Obviously, it is to be expected that Brussels would not approve of the alleged multiplication of superfluous entities that would further pay for the vision of the wasteful South fixed in the imaginary of Northern Europe. Real and efficient employment policies, pensions, the energy transition, digitalisation, teleworking and, in short, anything that truly represents real progress in the modernisation and innovative and harmonious development of the Union, will be the main areas in which these investments will be made.  

The project is also a first step towards a certain amount of tax harmonisation. It lays the foundations for the EU to be able to create some kind of Community tax, either under the heading of environmental taxes or taxes on multinational companies, which would give the Community government greater power to promote more ambitious policies, and would shake off dependence on the unanimity of the 27 governments.  

There may be some naïve people on the shores of the Mediterranean who believe that money falls from the sky without any consideration or supervision. The dream will soon dissipate, mainly because that money, even with the unavoidable conditionality, will not come tomorrow either. It will be from January 1 at the earliest, and between now and then the inner seams of the countries most affected by the crisis can be torn apart even further.