We have two important political decisions looming: First how to design the recovery fund agreed by the Eurougroup last week; second how to setp up the MFF for 2021-2027 in light of this crisis.
Here is why I think it would be wise to keep the two politically strictly separate:
Here is why I think it would be wise to keep the two politically strictly separate:
1/ Ideally, the recovery fund will become the tool for effective burden sharing in this crisis. This would mean that it would channel substantial transfers to the hardest-hit countries like 🇮🇹 and 🇪🇸. This should be done in the EU legal framework for a variety of legal...
2/...and political reasons. Article 122 is a suitable legal basis here. An essential feature of the recovery fund shuold be its one-off nature. It should be a tool tailored to the very specific needs of this very specific crisis to allow us to use paths otherwise barren.
3/ If it is supposed to be macroeconomically meaningful, it will need to be funded either by additional one-off contributions or through joint borrowing to spread the cost over time. See our proposal with @GrundSebastian and @COdendahl:
delorscentre.eu/en/publication…
delorscentre.eu/en/publication…
4/ Of course such an instrument would in one form or another need to be *technically* plugged into the wider EU financial architecture, e.g. because borrowing has to be partially backed by the EU budget. But it should be *politically* kept separate from the MFF negotiations.
5/ Why? Because such a new EU instrument will already require a ton of political will. Changing however the entire structure of the MFF to cater for a completely new burden sharing necessity is a different ballgame. It would not be a one-off exercise. It would change everything.
7/ It would mean to introduce a new redistributive logic into the MFF (mostly north-south instead of west-east) and a completely different size. It's hard to see some countries supporting a temporary solution; it's much harder to see them going for a permantently revamped MFF.
8/ Thus the more likely outcome would be that folding the recovery fund discussion into the MFF debate is that instead of the MFF being reoriented towards recovery, it will just eat the recovery fund. This is what happened to the BICC, which ended up a copy of the cohesion funds.
9/ Therefore the recovery fund should be set up as a separate EU instrument for a very specific purpose.
And in parallel, a new MFF should be adopted that ensures that the EU has enough funds to spend for the whole seven years and in all member states.
And in parallel, a new MFF should be adopted that ensures that the EU has enough funds to spend for the whole seven years and in all member states.
