Home / EU Recovery Fund – a significant compromise, but full of flaws
EU-Leaders are in bitter clash over Recovery Fund. Differences were so great that the summit of all 27 leaders together, originally planned two-day summit, took four days. A compromise was finally reached. The 750 billion program was accepted, but with significant changes. The final compromise on the table is setting a €390 billion worth of grants and €360 billion of loans. The recovery fund had originally set €500 billion to be handed out as grants and €250 billion in loans. Alongside this, leaders are poised to sign off on the EU’s next seven-year budget of €1.074tn.
The EU’s Recovery Fund is the first time the EU borrows money to give it as grants to hard-hit parts of the EU. This is a first step in the right direction. But this historical chance of uniting in ahead of the economic crisis was shadowed by the division over governments’ lack of willingness to pool their financial power. It’s due to the dictate of the ‘Frugal Four’, led by PM Rutte. The reduction on grants from 500 to 390 billion is a significant deterioration and not acceptable. This will also shorten important programs for future development. Apart from the fact that the height is insufficient, the conditions are decisive. We are against the connection to the European semester.
The return of conditions that inhibit demand, such as wage and pension cuts or privatization of public services has to be prevented. What the EU needs is a recovery plan which sets people’s wellbeing, public health and social-ecological transformation as its priority. We need a social and just Green New Deal, which focuses on people not just on profit. As an immediate measure we need more investment in public services and tax justice in order to build up welfare systems which are able to cope with the crisis. Furthermore the ECB must be enabled to finance a European investment plan, capable of launching employment and guaranteeing the environmental and social conversion of production and the economy.
Heinz Bierbaum,
President of the European Left
