The European Union summit meeting, called to discuss recovery funds for the member countries, has dodged the bullet that was about to shake up the very foundations of the union. The tempestuous marathon of the Council in Brussels demonstrated once again, in very serious terms, that United Europe is far from realizing a dream of becoming a strong cohesive actor in the world.
It will never be a true bloc but something between an economic partnership and an assemblage of nations that individually plot to extract from the union more than they put in, financially and politically. For a cliffhanger moment in Brussels, it looked like the Europeans – minus the British – were about to satisfy a not so secret wish of President Trump’s - the disintegration of the European Union that the United States had strongly egged on at the signing of the Treaty of Rome in 1957. Now that the dust has settled, the European Union has survived: in fact, it accomplished a miracle of solidarity, for the fateful reason that its representatives took seriously their foreboding that leaving behind the weaker members would pull down all members into a cataclysmic systemic crisis that would impact everybody, including the strong nations.
It took 92 hours of uninterrupted negotiations to craft a compromise between the northern members and those of southern Europe over the 2021-2027 budget of the Union and, most importantly, over the COVID-19 recovery fund. The fund will receive 750 billion euros (over $800 billion) that will constitute the union’s debt. Of this amount, 390 billion will be distributed as grants while the remaining 360 will be disbursed as loans. The crux of the European Union disarray is the obdurate opposition by the so-called “frugal countries” – Holland, Austria, Denmark, Sweden and Finland – to a massive funding of the nations that were devastated by the pandemics, principally Italy and Spain. The “frugals” – led by the Dutch Premier Rutte – were adamant in pushing a veto power over the disbursing of funds to those southern countries that would not abide by certain conditions of the grants. At the end of the day, the veto was not approved but the disbursement of grants was tied to a plan of reforms in the beneficiary countries to be approved by the Commission and the European Council with a simple majority. In reality, then, the threat of a veto. The fund will be available in the second trimester of 2021. Italy will receive the lion’s share, 209 billion. The Dutch, who clearly are no friends of Italy, were the ones who fought tooth and nail (not to mention subterfuges in the choice of adverbs) to limit and possibly veto a large disbursement to Rome. If anything, the “frugal” Rutte achieved a victory as the amount of grants was reduced. The president of the European Bank Lagarde was pushing for more grants and fewer loans but was stymied.
What has emerged in Brussels is that Europe is fraught with a complex balance between collective values and national interests. In its role as a spoiler, Holland could not go as far as exercising the veto on the funds that the union will spend in Italy, Spain and other southern countries. On the other hand, Europe wants to make sure that the money will be spent on well defined, verifiable projects to be completed within the allotted time.
In the last analysis, the outstanding imperative is to spend the money wisely. Much depends on the work to be done by the public administration of the member countries, through advances in digital modernization among other compelling needs. It is a principle that can be applied to the United States, where lots of resources do not go to those who need them the most.
Last but not least, the Brussels summit has punted on the issue of the rule of law that is systematically violated in countries such as Poland and Hungary, where the judicial system, the press and other institutions are increasingly under government control. The European idea was to tie the recovery fund to democratic values on the basis of rules that in theory should sanction democratic breaches. At the closing of the summit, the Hungarian prime minister Viktor Orban claimed victory over efforts to tie disbursement of funds to democratic values. The German Chancellor Merkel admitted that such attempts had failed. This was basically due to the huge maneuver to secure the disbursement of recovery funds without the veto demanded by the Dutch. They were bought off with a rebate on the national contribution to the union budget. The European Commission wanted to do away with the rebates. The summit meeting of the Council not only kept them but increased them. In particular, Holland will save 1.9 billion euros. In conclusion, nobody won and nobody lost. The recovery fund is being implemented with an historical first, the European common indebtedness. Admittedly, it is a big deal. And there is a winner, Angela Merkel. Her “conversion” to collective debt on a massive scale, blessed by the French President Macron, marks a dramatic change in Europe. As such, it will impact U.S – European relations for a long period to come, hopefully for the better.