EU launches recovery program against coronaviruses | Europe | News and events from across the continent | DW
European Commission President Ursula von der Leyen is visiting the capitals of almost all EU member states as the bloc launches its ambitious coronavirus recovery program, NextGenerationEU. The commission gave the green light to various European states to launch their investment programs. A total of 750 billion euros ($ 895 billion) will be distributed by the EU over the next six years.
On Tuesday, von der Leyen visited Berlin, Riga and Rome to promote the stimulus package – real negotiations between the head of the Commission and national governments were not on the agenda. Ursula von der Leyen and German Chancellor Angela Merkel, for example, were only scheduled for the briefest of meetings, even though Germany will receive 25.6 billion euros ($ 29 billion) from the stimulus fund.
German Angela Merkel meets Commission President Ursula von der Leyen
Thursday, the head of the Commission was in Paris and Brussels to mobilize support. She called the program the largest investment program in Europe since the United States’ Marshall Plan, calling it “an extraordinary response to an extraordinary crisis”.
Italy, big beneficiary
The European heads of government launched the EU stimulus program in 2020. For the first time in the history of the community, this type of fund is financed by the common debt. The program was designed to help jumpstart the European economy and emerge from the coronavirus recession.
Italy, an EU member state, will receive nearly € 200 billion, by far the largest share of funds. Spain, France and Poland will also receive substantial sums amounting to billions of euros. Smaller EU member Luxembourg, on the other hand, will only receive € 100 million.
Most EU member states have already submitted plans to the Commission detailing how they intend to invest the stimulus funds over the coming years. Only half of the money, in the form of a low-interest loan, will need to be repaid.
Investment plans must meet a series of criteria defined by the Commission. He decided that at least 37% of the funds should go to environmental and climate protection. An additional 20% must be invested in promoting the digitization of European economies and societies.
The Commission wants schools and universities to receive better teaching equipment and wants to see investments in vocational training programs and the health care sector. Another requirement is investments in public transport. Above all, EU member states must show that their investments can boost overall economic growth.
A helping hand?
Germany, said Ursula von der Leyen, has fulfilled all these funding criteria. It plans to devote a large part of the funds to promoting a digital transformation in the public health sector, in hospitals and schools. An area where, recently conceded Chancellor Merkel, “we have some catching up to do”. The money will also go to research into climate-friendly hydrogen. The European Commission estimates that these stimulus funds will allow Germany’s gross domestic project to grow by 0.4 to 0.7%.
But Green MEP Daniel Boeselager disputes Germany’s investment proposal. Much of what Germany is touting as part of the EU’s stimulus package was already factored into the country’s € 130 billion national stimulus package in 2020, meaning that Germany simply reallocates EU funds to projects that would have been covered by its own budget. This, says Boeselager, produces no additional economic stimulus.
Italian reforms planned
Italian Prime Minister Mario Draghi has set up a special task force to oversee and lead the EU’s broad investment program in his country. A series of overdue reforms are planned to be launched. The idea is to improve the efficiency of the Italian bureaucracy and the judiciary. The government has also set up an audit body to prevent the embezzlement or embezzlement of EU funds. Italy has a national stimulus package worth 40 billion euros – EU stimulus funds will further boost this effort.
Daniel Boeselager, however, accuses the country of greening its investment proposal. He says the projects are written in environmentally friendly language to secure EU funds. It therefore calls for legally binding targets that define the amount of CO2 that will be reduced.
Money might start flowing soon
However, the national investment plans are still rather vague at this stage, largely proposing criteria, procedures and strategies for the realization of projects. And before Brussels can start transferring money, the European Council has yet to give the green light. Then, states will submit concrete investment requests that will need to be approved by the Commission. According to EU figures, the money for the project could start flowing by the end of 2021.
The EU’s stimulus budget is financed by guaranteed loans on the financial markets. The first round of funding worth 20 billion euros was largely oversubscribed, signifying substantial confidence in the solvency of the bloc. The idea is to use tax revenues and member state contributions to pay off this debt over the next decades.
This article was translated from German