For a long time, “historical failure” had threatened, as the international media noted on Monday. Then it became a “historical result”. And a package that is also remarkable in detail.
Merkel secures additional funds for Germany
Germany was thus able to secure a total of one billion euros in additional funds. As can be seen from the compromise proposal for the meeting, Germany is to benefit from the next seven-year financial framework 500 million euros for East German regions received to “promote competitiveness, growth and job creation”. Further 500 million euros are designed for rural development intended.
That is the framework of the package
The package includes 1,074 billion euros for the next seven year old Budgetary framework until 2027 and 750 billion euros for an economic and Investment program.
The special fund of 750 billion euros is particularly aimed at countries in need. 390 billion euros of which are said to be grants, 360 billion are offered as loans. 70 percent of this is to be spent in 2021 and 2022, 30 percent are reserved for 2023.
The distribution is primarily based on how much the economy will collapse in 2020 and 2021. In 2022 the payments for 2023 will be checked again.
The countries concerned should submit plans for use themselves, which the EU Commission will then examine within two months. The criteria are based on the country-specific recommendations that the EU Commission makes anyway. A prerequisite for the release of funds should be that money is also used for climate protection and digitization projects.
EU governments must then approve the Commission’s decision by qualified majority. This is to guarantee that the grants do not simply flow into the normal budget of the EU countries. If “one or more” governments have doubts, they can request a debate at the next EU summit.
Joint debts for the first time
For the first time, the EU Commission is allowed to take on large amounts of debt. The 750 billion euro bonds will run until 2058. Repayment is scheduled to start before 2027 and will be paid from the EU budget. The federal government had emphasized that the uniqueness of the crisis justified this unique action. This should not be an entry into a “debt union”. French President Emmanuel Macron on Tuesday praised the fact that ME now joint debts for the first time mache.
Rule of law? Debate postponed
Linking EU payments to the rule of law was one of the issues at stake – which is now being postponed. The decision is now limited to two elements: Firstly, it emphasizes that the financial interests of the EU must be safeguarded and rules of law are important.
On the other hand, the Commission is asked to come up with a concept for introducing a “regime of conditions for protecting the budget”. Of the The EU Council should then take measures in the event of a breach of these rules by a qualified majority – this should trigger another heated debate. However, since no unanimity is required for this decision, the likelihood that violations of the rule of law can also be sanctioned increases.
While EU officials described it as an effective coupling, the Polish news agency PAP cited Polish government sources as saying that the coupling had been removed. Hungarian media celebrated the agreement as a victory for Prime Minister Viktor Orban.
Merkel was evasive. “You know that a legal act that the Commission has proposed is being discussed in the Council,” said the former CDU leader in Brussels. “This legal act must now be continued.”
Possibly one will deal with questions on the topic again at an EU summit, said the politician. A qualified majority is needed to adopt the legal act in the Council of Ministers.
Foreign policy and migration cuts
EU Commission President Ursula von der Leyen regretted cuts in some of the new budget instruments she proposed in the agreement at the EU financial summit. For their compromise, the heads of state and government had made “far-reaching changes” to their proposals for the next EU budget and the Corona Aid Fund, said von der Leyen early Tuesday morning. Cuts on issues such as health, migration or foreign policy are “unfortunate”.
In particular, she stressed that the Heads of State or Government had disregarded a financial instrument she proposed to support companies at risk of bankruptcy. More than half of the total budget from the multiannual financial framework and Corona aid fund will continue to be available for “modern politics”. But the “innovative share of the household” has decreased, said von der Leyen.
In a negotiating document on Monday, 3.5 billion euros were explicitly earmarked for the foreign policy instrument NDICI; NDICI funds go primarily to developing countries. This item was missing in the final document. The NDICI funds in the regular budget remained the same at 70.8 billion euros.
Climate policy: plastic tax and new investments
Regardless of the corona crisis, budget orientation towards climate policy had been planned for a long time. This should become a cross-cutting issue, and 30 percent of the expenditure of the financial package should contribute to the – still to be agreed – EU climate target for 2030.
The agreement, adopted early Tuesday morning, provides for Member States to levy on non-recycled plastic as of January 1, 2021. A levy on the import of CO2-intensive products from third countries and a special tax for digital companies are to follow by 2023 at the latest.
The plastic tax is calculated by weight: from next year onwards, each Member State will have to pay 80 cents per kilo of plastic that is not recycled to Brussels. The measure hopes that the EU will primarily reduce plastic waste – so revenue is likely to decrease over time.
A long-term stable new source of income in Brussels is supposed to be a CO2 limit tax. A surcharge should be levied for imports of products that are manufactured in a climate-damaging way in third countries. The aim is to prevent industrial migration to countries that are less ambitious in terms of climate protection than the EU.