Europe against the coronavirus: a first assessment from Domenec Ruiz Devesa

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Heinrich
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Europe against the coronavirus: a first assessment from Domenec Ruiz Devesa

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Domenec Ruiz Devesa von der UEF gibt hier eine erste Einschätzung der EU Reaktionen auf COVID-19.

The world public health crisis that we are experiencing because of the COVID-19 is proving to be in all its harshness as the greatest threat to Europe since the Second World War, just as the 70th anniversary of the Schuman Declaration that gave rise to the integration project is about to be celebrated on 9th May.

Listening to the daily figures of the dead gives us a chill similar to that which a war party must have caused our ancestors. As in 1950, our ambition must be equal to the challenges (and threats) of the present time, while we loyally support the government of Pedro Sánchez in its effort to curb contagion, which fortunately is already beginning to be achieved. Our thoughts are with the victims, their families and friends.

But, in addition, the necessary induced hibernation of the economy is going to cause falls in the GDP of between 20 and 30 percentage points in the same year, figures never before seen since the Great Depression of 1929, with the consequent social tragey that this entails due to the generalized loss of jobs and income. Thousands of families in the province of Alicante have been left without a net and are at risk of hunger. The Socialist Municipal Group of our city is right to call for a social emergency plan worth nine million euros. I also welcome the new package of 40 million euros in aid that has just been approved by the Council under the leadership of President Ximo Puig.

For its part, the Spanish government has implemented measures to compensate companies and workers to the tune of 200,000 million euros, but a European response must be given, because the double-digit increases in public deficit and debt percentages will penalise some countries more than others. Once the public health crisis has been overcome, which also requires a European health union on the basis of Article 168.5 of the Treaty (combating cross-border pandemics), our continent will have to implement a genuine economic revival programme as proposed by our President, in the style of the Marshall Plan that rebuilt Europe in the post-war period, but in reality to a much greater extent than was employed then. It is estimated that we will need around EUR 1 000 billion for the whole of the European economy.

Although the initial impression that was conveyed was negative because of the ineffective communication policy of Ursula Von der Leyen, President of the European Commission, who missed a golden opportunity to act as a leader of reference in this crisis, addressing all Europeans from the very first minute, a good number of measures have been taken to date by the European institutions. It is important to report on them and to highlight them, even though we know that more action is needed, otherwise we will be feeding Europhobic tendencies in the public opinion in the countries that have been most affected, such as Italy, France and Spain.

In any case, flexibility was immediately applied in the Stability and Growth Pact, which sets strict limits on public deficit and debt, so that fiscal expenditure resulting from the crisis would not be considered contrary to it. State aid to companies was authorised. 37 billion of unused structural and cohesion funds were made available to combat the consequences of the pandemic. A modification of the European Union Solidarity Fund was approved to include in its scope of action, apart from natural disasters such as earthquakes or floods, risks and emergencies linked to public health, putting at the moment an additional 800 million euros in this year 2020 to support health care. A further EUR 2.7 billion can also be mobilised through the Emergency Support Instrument. This package is of a non-reimbursable nature, but of an admittedly insufficient macroeconomic amount.

The Commission has also set up a central purchasing office for healthcare equipment, and has increased the budget allocation for coronavirus research by several hundred million. In addition, the European Investment Bank has set up a guarantee fund to provide loans to companies, with particular emphasis on SMEs, to the tune of EUR 200 billion. The European Central Bank, for its part, has announced a programme to buy up public and corporate debt to the value of EUR 750 billion, which will prevent Member States, particularly our own, from having financing problems on the capital markets.

These measures are certainly to be welcomed, and therefore supported, as I was able to do with my vote on some of them in the plenary of the European Parliament on 26 March 2020, the first ever without the majority of its Members present. However, as we in the Group of the Party of European Socialists and Democrats, effectively chaired by the Spanish Iratxe García Pérez, have been demanding, many more resources are needed to compensate for the brutal fall in income and earnings that states, companies and workers, including the self-employed and the informal sector, must face Certainly our Union is based on permanent dialogue and negotiation, and this always takes time, but since then, the institutions have proposed new interventions worth half a billion euros. Spain will be one of the main beneficiaries of this European solidarity.

The European Commission has proposed a system of loans to finance the States' temporary redundancy programmes, the capital of which would be raised through an issue of European public debt, reinforced by national guarantees. 100 billion, but not more, given the limit imposed by the current Multiannual Financial Framework (the EU's seven-year budget). The EU-27 governments have already agreed to this initiative.

As for the enlarged Eurogroup, which in practice brings together all 27 finance ministers, on 9 April 2020 it agreed on a package that practically fulfils the aspirations of countries like ours, except for Eurobonds in their version of joint debt issuance by the 19 states of the Eurozone, which continue to be fiercely opposed by the governments of Germany, the Netherlands and Austria. However, it will be possible to attract financing from the European Stability Mechanism, endowed with 400 billion euros, without demanding the usual cuts in social spending or in labor rights (the so-called conditionality, highly questionable in its usual neoliberal orientation), and at a lower cost than the market for countries like ours. Spain would be entitled to receive a sum of up to 2 percent of its GDP.

The current and insufficient proposal for a multiannual budget for the Union, which is calculated as a percentage of the Union's GDP, would also be adapted. Of course, the expenditure ceiling will have to be raised considerably, if only because of the arithmetical effect of the fall in nominal GDP in the financial year 2020 and that of 2021 (at least). The European Commission must quickly propose a new draft budget with a threshold considerably higher than the current 1.1 per cent of Community GDP, which no longer even meets the priorities of the Von der Leyen Commission (ecological transition, migration, strengthened foreign policy, etc.). Even the 1.3 proposed by Parliament will certainly fall short. On the other hand, debt, insofar as it provides financial means to the Union, should also be officially included in the list of own resources (i.e. those not coming from national contributions provided by the States from their budgets).

Finally, the Eurogroup has agreed to design a Fund for the Recovery of the European economy, which we could well call the Sánchez Plan. It would be linked to the Union's budget, and could take the form of an issue of Community debt (which in the end means mutualisation), backed by new financial resources, as the Socialists and also the European Federalists have been proposing: a tax on C02 at the border, a tax on financial transactions, a tax on plastic, a digital tax, a fraction of the common consolidated corporate tax base, and the profits of the European Central Bank. The important thing, for the accounts to be balanced, is that the economic revival plan should mobilise no less than another half trillion euros.

What else can be done? The capital of the European Investment Bank and the European Stability Mechanism could be increased so that they can offer additional funding to the States, and we could propose to the European Central Bank that it transfer money directly not only to the banks, but also to the households in the Eurozone, to ensure that no person is left without support, thereby relaunching consumption when the periods of confinement are over. In this context, it would be more than reasonable to postpone the United Kingdom's departure from the European Union, extending the transition period until 2022, but this is something that Mr Johnson must call for.

In the medium term, it is necessary to go beyond the health and economic emergency, addressing the institutional dimension: it is clear that public health must be a shared competence between the Union and the Member States. The Union must have the power to impose, in a harmonised manner, hygiene, health and social distancing measures in the event of pandemics, such as those adopted unilaterally and in an uncoordinated manner by the majority of Member States, often in violation of the internal market (limits on the export of medical equipment) or of the free movement of Schengen (the closure of borders by the brave). In addition, the Social Pillar (to which the Health Union must be a part) and the Green Pact (which is essential for restoring the environment and also causes new viruses to appear) must be constitutionalised (integrated into the Treaties). Above all, however, we must speed up decision-making by abolishing the paralysing unanimity in the Council (which is lethal in emergencies such as the present one), and give Parliament more power.

As has often happened in history, tragedy can give rise to the best of futures. We must overcome this crisis and turn it into an opportunity to relaunch Europe's political integration, in order to make ourselves stronger in the future in the face of all kinds of threats to our security, including those of a public health nature, but also those of a geopolitical nature, which, as Josep Borrell points out, have not disappeared with the coronavirus. 9 May 2020 is the perfect time for the signing of the Interinstitutional Declaration by Parliament, the Commission and the Council, which is necessary for the implementation of the promised Conference on the Future of Europe, an area which must be a catalyst for the adoption of a new federal constitutional pact for our Union.
Mit europäischen Grüßen,
Heinrich Kümmerle
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