Europe Debates Recovery Plans

The COVID-19 pandemic has forced unprecedented health, economic and political consequences on countries, their parliaments, and their citizens. Across the European Union, national parliaments have kicked into gear with initiatives and stimulus packages created to cushion the economic and financial fallout of the crisis. Here you can find the OED’s most recent resource outlining the economic responses of all European parliaments to confront these consequences.

Although national parliaments have implemented successful measures to combat the pandemic, the attempts at solidarity through joint EU initiatives have not gone undisputed. Debate and disagreement on what an appropriate economic policy response should look like remains prevalent between EU member states and efforts to reach decisions at the European Council and Eurogroup have been thwarted by differences. The European Commission has since been tasked with formulating the specifics of a European Recovery Fund and with delivering proposals on a new financial instrument to combat Covid-19.

It was within this setting that the OED, together with its partner institution, the Hellenic Institute for European and Foreign Policy (ELIAMEP), facilitated and organized an online discussion on 5. May, for ten parliamentarians from seven EU member states ­– Portugal, Netherlands, Bulgaria, Greece, France, Lithuania, Belgium, and Ireland – to be able to to exchange national perspectives and discuss the European initiatives that have been, and that continue to be, generated in response to Covid-19.

The discussion between parliamentarians was joined by George Pagoulatos, Director General at ELIAMEP and Professor of Economics and Business at Athens University,  and Adriaan Schout, Senior Research Fellow at Clingendael and Professor of European Public Administration at the Faculty of Management Sciences of Radboud University in Nijmegen, who offered an outline of Europe’s recovery initiatives and debate.

Key observations and takeaways:

The discussion was framed around the expert’s introductions to the EU’s recovery measures, as well as by their contrasting perspectives from Southern and Northern Europe. These diverging perspectives went on to characterise the proceeding dialogue between parliamentarians on the call. Although the MPs communicated their countries priorities along these dividing lines, common ground was found in the recognition that Europe is faced with an extraordinary economic and geopolitical challenge that must not see the EU lose out on the global stage.

Perspective from the South:

• The issue of conditionality was key to characterising the Southern perspective on Europe’s recovery plans. The idea that conditionality should be avoided at all costs provided a clear divergence from the Northern perspective on this issue, seeing as their preferred course of action is one where conditions are placed on recovery funding. The case for no conditionality was held up by several lines of reasoning. For example, a pandemic is an external factor for which one cannot pin the blame and so conditions would be an unfair and unsustainable burden. There was also the suggestion that no conditionality could mean a recovery fund that looks like a new Marshall Plan – the funds are made available without conditions, but there is still discussion as to where the money should best be invested.
• ‘Update your thinking’ was another idea that characterised the Southern perspective. This focused on how Northern European politicians should not forget that the diversity of the European Union is a strength and that Northern Europe does and will continue to need Southern Europe (e.g. for exports). Hence, the states that are struggling need to be supported now.

Perspective from the North:

• From the Northern perspective it was clear that solidarity in Europe’s response to the crisis is important, but this must be partnered with solidity. Solidity from this perspective means ensuring formal structures to guarantee sensible economic governance, for example, this would mean having conditions on recovery funding, to avoid similar consequences to those arising from the second euro crisis, where the joint principles of economic governance were ignored, and countries were able to rack up huge public debt.
• Another key issue arising from this perspective was the changing sentiment for the EU in many European countries. The fact that anti-EU sentiment is becoming mainstream in some public pockets, parties and parliaments in the EU was made clear and with the different economic situations that idea that national governments wishes should be ignored would only serve as fuel to these feelings.
  • e.g. In the Netherlands public support for the EU peaked in 1991 and has never managed to regain this level.

Common ground was found in the agreement of the magnitude of the pandemic shock that Europe faces. The idea that one should think in a broader context was also agreed upon, as it was recognised that it can be easy to focus solely on regional and national concerns. One should remember to frame discussions within the broader European logic of compromise, mutual benefits and shared values.

Recovery and Restructuring:

In many ways the Covid-19 crisis has amplified the structural problems within the EU. These structural concerns were also identified in the existing instruments in place for Europe’s recovery. For example, EIB funding goes to the corporate sector and the ESM subscribes to privatisation, clearly demonstrating how the current European funding mechanisms are not designed to strengthen bottom up funding. There was emphasis therefore on how the recovery must focus on changing the current mechanisms, that only focus on short-term crisis management, to new sustainable plans that can help combat both this crisis, as well as future crises (such as the climate crisis).

“We should see differences as something that bring us together rather than as things that divide us further”

“There shouldn’t be a return to austerity as a means to accepting a common European instrument”

“More convergence, less divergence”

“Trust has to be mutual”

“Coronavirus amplifies the problems of the EU”

“This crisis is worse than previous crises – the diplomatic tone has gone out the window”

– MPs at the Open European Dialogue, 5. May 2020.

Quote from the Call – “Our policy is not directed against any country but against hunger poverty, desperation & chaos” – George C. Marshall

This Marshall quote was identified as potentially constructive in considering Europe’s collective crisis response because it must be remembered that the key social issues of our modern society – such as hunger, poverty and the climate crisis – still exist, and these issues must not be forgotten in the recovery initiatives we choose to implement.