{"id":1395,"date":"2020-07-24T15:31:09","date_gmt":"2020-07-24T16:31:09","guid":{"rendered":"https:\/\/malvinartley.com\/blog.malvinartley.com\/?p=1395"},"modified":"2020-07-24T15:31:09","modified_gmt":"2020-07-24T16:31:09","slug":"europes-historic-day-almost","status":"publish","type":"post","link":"https:\/\/malvinartley.com\/blog.malvinartley.com\/2020\/07\/24\/europes-historic-day-almost\/","title":{"rendered":"Europe\u2019s historic day, almost"},"content":{"rendered":"

Amidst great fanfare it was announced on Tuesday morning that a deal had been struck to salvage the European Union, after 90 hours of fraught negotiations. It was not stated thus, but that is what the agreement amounts to. The European Council President Charles Michel tweeted<\/a><\/span> at the conclusion of the deal, \u201cWe did it! We have reached a deal on the recovery package and the European budget for 2021 \u2013 2027. This is a strong deal. And most importantly, the right deal for Europe right now.\u201d Maybe so, but the bill has to pass the EU Parliament, and there will be checks that the money will be well-spent. The UK is not included in the package, since it decided to leave the EU. Will it ultimately be enough to save the EU, is it another version of the Greek bailout, or is it just a temporary band-aid?<\/span><\/p>\n

The main recipients of the bailout recovery package will be the \u2018Club Med\u2019 states, notably Italy and Spain, who were particularly hard-hit by the COVID crisis. The total package amounts to \u20ac750 billion ($860 billion+). Of that, Italy is set to receive just over \u20ac200 billion, the largest amount of any nation in Europe, with Spain as the second-largest recipient. About 40% of that will go to subsidies and the rest to loans. But strings will be attached, and that is what has many people worried about a repeat of the Greek fiasco. This will be the first instalment of probably several articles about what lies ahead for the EU. We start with the deal itself.<\/span><\/p>\n

Rabobank, a Dutch multinational banking and financial services company, has the best summary<\/a><\/span>. This deal is said to be a watered-down version of the initial proposal:<\/span><\/p>\n

This weekend, the heads of state of the 27 EU member states met in Brussels to discuss the revamped EUR 1074bn multi-annual financial framework (MFF) and the EUR 750bn \u2018Next Generation EU\u2019 stimulus package. The revamped MFF and the recovery package, aimed at mitigating the economic damage of the COVID-19 crisis, spurred the debate on European solidarity in the past months.<\/span><\/p>\n

European Council chairman Charles Michel has met with each prime minster and president bilaterally in an effort to get everyone on board. Additionally, a number of leaders, such as chancellor Merkel, president Macron and prime minister Conte have met with the Dutch Prime Minister Rutte, leader of the Frugal Four (Netherlands, Denmark, Sweden, Austria), in attempts to persuade the Dutchman to soften his stance towards the deal. The four member states have expressed their concern over the initial conditions of the package. Specifically the notion of grants and the governance of the fund.<\/span><\/p>\n

Michel unveiled his new proposal on July 10. The plan closely resembled the original plan of the Commission but shifted some of the governance of the fund towards the European Council (and thus the heads of state) and away from the European Commission. Reform plans can now be passed by a qualified majority in the European Council.<\/span><\/p>\n

There were four main sticking points to the deal, voiced largely by the \u2018Frugal Four\u2019 (Austria, the Netherlands, Denmark and Sweden) and the Visegrad states, who have warned that the spending must be responsible. Italians bristle at that sort of talk. Merkel and Conte have warned them<\/a><\/span> about cuts to the coronavirus response. Those four points were, from the same article:<\/span><\/p>\n