Five do not make up the population of Italy, they count for one tenth of that of the European Union and one sixth of its income. Yet they are the biggest obstacle in the greatest of tragedies. Holland, Austria, Denmark, Finland is Sweden, in order of contemptuous intransigence, emerged in recent weeks in Brussels as the big gearboxes: lined up with vetoes to make the name of Recovery Initiative as small and useless as possible, in reality an archipelago of programs that should to form the European response to the deepest and most unpredictable peacetime recession.
Not only these five countries manage to contain and fray the contours of this package for the European Union which, by now clear, will be a good bit under a thousand billion. They also come back to unpick what is already woven. These days they are intent on reducing the European Investment Bank’s celebrated guarantee program for 200 billion in a plan that is in fact worth just five, in an economy of 13 thousand billion: they require that the effective guarantees of the EIB (in fact for 25 billion out of 200 of investments) can not be affected in any way.
One may think that it is incredibly short-sighted to pick cohesion and holding of the European Union for five small countries which, on average, owe 57% of their income to exports. Especially in a world that has already seen trade collapse with China and the United States. Each saw the branch on which to sit in his own way. But the results can be seen, one after the other, in the Recovery Initiative that Commission President Ursula von der Leyen unveiled on May 27 – three weeks late – to propose it to national leaders. These will then need at least two summits to agree, of which the first on June 18.
The five Nordic countries demand that the European package, in von der Leyen’s proposal, does not exceed 350 billion euros. France, Italy, Spain, Portugal, Greece, Cyprus (with an understanding of Belgium, Ireland, Slovakia and others) offer a thousand. it is inevitable that the Brussels proposal will ultimately be worth between 700 and 800, in view of likely new downward negotiations between governments next month.
But also the composition of the package to be discussed, because the portion of non-refundable transfers will not exceed 250 billion euros; the rest will be loans to be repaid. Of those 250 billion, two hundred should be paid into a budgetary instrument for convergence and competitiveness and distributed to countries only under certain conditions: they must finance projects on major European issues such as the environment or new technologies and will be provided only on condition that the beneficiary governments implement reforms indicated by the Commission. In all likelihood, these are not deficit cuts, but measures on the education system, bureaucracy or civil justice indicated in the Brussels reports. another 50 billion cohesion package with fewer constraints is expected.
Then there is an expansion of InvestEU, better known as the Juncker plan. the so-called Solvency Support Instrument would be inserted, what should be the European fund for capital investments in European companies considered reduced by the pandemic on the verge of bankruptcy. The initial idea was that it was worth 250 billion, the work of the five small nationalist countries of the North has reduced it to 50 billion. This tool would actually be formed by EIB guarantees for individuals who enter the capital of companies of at least 50 employees defined as strategic for Europe thanks to their product or their supply chain. Finally, there will be the part of loans, on terms and deadlines still to be negotiated with a Netherlands that refuses repayments too spread over time.
Rome and Paris are already protesting with von der Leyen, why not present a proposal that is already too timid which governments in turn will negotiate even more downward in June. The whole European package is not worth the thousand billion that Germany alone is giving to its businesses. Of course, Italy in 2021 and 2022 will still have European resources to double its approximately 40 billion a year of public investment: provided, of course, that the administration is able to do so.