Reflection on the Recovery Plan for Europe

These are some of the reflections and conclusions expressed by the speakers during GLOBSEC’s online webinar Europe in the post-COVID-19 world. Could Flexible Europe Work? that took place on 29 May 2020.   

The EU Recovery Package put forward by the European Commission this week is widely lauded as far-reaching and game-changing in EU history. The European recovery plan highlights an important milestone in European unity. There is a near consensus, or at least a welcoming approach from most of the Member States, which is a good sign for the future of Europe. 

Amid the first uncoordinated responses to the COVID-19 pandemic, the speed of the EU reaction should be qualified against the past performances. The EU has learned the lessons and has acted much faster and in a much more concerted manner than in the aftermath of the 2008 financial crisis and the 2015 migration crisis. For example, we are looking at 4 years in the aftermath of the financial crisis against 4 weeks in response to the COVID-19 pandemic.  

What is key now is to work on well-coordinated steps forward in the recovery phase.  As the crisis has caused distortion to the single market in multiple ways, the following issues need to be thought through when we design and implement our recovery package: 

1. A rule of law that is the bedrock of the level playing field across the single market,
   
2. Divergent capacities of Member States to provide state aid and bailout their companies,
   
3. The discussion about industrial Europe and strategic autonomy that risks focusing on national perspectives rather than on treating Europe as a unit. 

It's worth mentioning that there is some natural logic to European integration and the way it works. When we look at history, the EU usually takes one step back to take two steps forward. For example, now in the COVID-19 crisis, we have frozen most rules and regulations related to the internal market, such as the free movement of people, services and goods and we have started to think more flexibly about state aid rules and competition rules. On top of that, we have started to give the growth and stability pact rather flexible integration. Two steps forward, it’s definitely the EU Recovery Plan worth 750 billion EUR (250 billion in loans, 500 billion in grants) and the new Multiannual Financial Framework (2021-2027) worth 1.1 trillion EUR. It is very important as for the first time in the history of the EU, we can truly start talking about something that has been branded by so-called Social Europe. It is reflected for example in the SURE programme (a new instrument to help people stay at work) or a new Health Programme, EU4Health to strengthen health security and prepare for future health crises. 

Key takeaways and conclusions: 

1. European recovery highlights an important milestone in European unity. There is a near consensus, or at least a welcoming approach from most of the member states, which is a good sign for the future of Europe.
   
2. The views on how to move forward are still not homogenous though. Differentiated integration, or coalitions of the like-minded to move ahead on certain issues without having to wait for the unanimous conformity, might be unavoidable and at times, desirable. What is inadmissible is a differentiated integration of the rule of law and democracy. If we do not have the same baseline of norms and rule of law principles across the continent, the single market itself will not be sustainable.
3. There is always a tendency for governments of any kind to overestimate what they can do in the short term and underestimate what they can do in the long term. For the sceptics, the Commission proposal is overly ambitious, if not idealistic, in its declared goals and there are limits regarding what the EU can achieve especially given the available financial resources and disagreements between the member states. Similarly, the recovery plan should not be judged by its contributions to crisis management solely. While curtailing the immediate effects of the crisis is undoubtedly a must, the EU’s ability to fix it now should not be overestimated. The EU was never designed as a crisis management tool, and it is not good at it. What the EU is good at is long term frameworks and building consensus, both of which also help avoid a crisis in the future.
   
4. Important to see what people really want as opposed to political rhetoric. The discussion at the Conference of Europe should be part of our “political recovery package”. Contrary to what transpires from political rhetoric, there is overwhelming support across the continent for democratic values, including media freedom or rule of law.
   
5. Similarly, there is strong support especially among the younger population of the idea of a green Europe and social Europe. The current proposals are an important step for us to be able to say that for the first time, we can truly speak about foundations for both, social and green Europe.
   The merger of these two helps achieve both climate and social goals and sends a strong signal that the EU is on the side of the citizens. It is the way to demonstrate the accountability of governments towards citizens, of corporates towards citizens. Social and green agenda is a new boost to European integration especially as a way to engage the younger generation who understand that they will be the ones most affected by climate change and the digital transformation.
6. The way Europe designs and implements its domestic recovery plan also has strong implications in its geopolitical position and global role. The proposals are a good starting point for an ambitious recovery that aims to align with Europe’s strategic priority – green, digital, globally competitive. Europe will need to work out its positioning against the U.S. and China. While European and American interests align in the majority of cases and areas, they will not and do not need to be identical. With a significantly lower number of overlaps with China, Europe has strong grounds for cooperation where it delivers global good and shared benefits. To be strong globally in its own might, the EU needs to convert the recovery plan into strong economic and democratic performance.

Way forward 

What can be expected now is a classic debate in the European Union between North and South, and ‘frugal four’ and the others? But in the end, this debate is foremostly an ideological one, between the left and the right, which comes down to macroeconomics. When the proposal put forward by the European Commission is about macroeconomics and finance and very little about bookkeeping. But as often a case in the European Union, the politics may lead us more to bookkeeping rather than finance. 

During the event, the GLOBSEC DIFF GOV Report ‘Making Flexible Europe Work: European Governance and the Potential of Differentiated Cooperation’, was presented. 

This event formed part of a research project DIFF GOV: European Governance: Potential of Differentiated Cooperation (2018-2020). DIFF GOV is an international project that explored the potential for flexible modes of cooperation between the European Union Member States. The project is implemented with the support of the Erasmus+ Programme of the European Union, namely the Jean Monnet Project.