The stakes of the German EU presidency: Europe’s future – Part 1 – The Weekly 16

Márton Gyöngyösi

17/07/2020

           

The rotation of the Council presidency is in the centre of attention every 6 months. Each EU Member State gets a chance in every thirteen years to shape the agenda of the EU’s highest decision-making body through presiding over Council meetings and prioritizing the objectives that are important for the particular country. 

Many people consider it as a divine miracle that the EU Council’s presidency is taken over by Germany on 1st July, right when the institution is about to face the gravest crisis in its history. 

We all know the reasons why Germany has always had a primary interest in keeping up the EU and reinforcing its agencies that are based on political and economic cooperation. Germany’s increasing economic weight and the fear of a German dominance drives the other Member States to call for an ever deeper integration. Furthermore, there is an enormous pressure on Chancellor Merkel, who is still considered as Europe’s leading politician despite getting closer to the end of her political career, to guide Europe out of its economic recession and all-out social depression.

In the post-war decades, Germany perfected the art of consensual politics while Ms Merkel’s nearly two decades of chancellorship has proven her aptitude in terms of finding leverage amongst the various opposing interests. 

She will certainly need this aptitude of hers at least twice in the next six months: namely, when it comes to accepting the EU’s 2021-27 budget along with the related 750-bn-Euro temporary reinforcement plan, and the closure of the agreement on the United Kingdom’s exit. Let’s take a closer look at both.

Any agreement on the EU’s seven-year budget (MFF) is fundamentally impeded by the fact that the Council needs to unanimously support it even before it is put up for a vote in the European Parliament.

Every budget debate is hampered by disagreements and opposing interests in terms of issues related to income and expenditure as well as funding and distribution.

In addition, the EU has to face another difficulty: it has no income on its own, it operates on the contributions of the Member States. This highly diverse community of 27 Member States is characterized by such a complex system of relations where sealing a deal in a Middle Eastern bazaar looks like a walk in the park in comparison. No matter how complicated it seems, the growing public pressure driven by the sentiment of a deepening economic crisis may force the stakeholders to come to an agreement as soon as possible. 

However, the financial-economic pressure will not be the only factor driving the tension to a peak. 

There are two fault lines that may substantially jeopardize the future of the European Union as a community based on the rule of law and solidarity.

Having brought the existing economic problems to the surface, the Covid-19 pandemic increased the North-South tension within the European Union (more specifically the Eurozone), which had been ill-prepared for the introduction of the common currency, especially in terms of the Maastricht convergence criteria. If the southern Member States, which already have significant debts and budget deficits, can only get the resources needed for their economic recovery as a loan repayable within a few years, they may suffer enormously in the long run even if the conditions of the loan are highly beneficial due to the 27 Member States acting as joint guarantors. What the example of Greece taught all of us is that excessive indebtedness leads to societal collapse in the Eurozone, as a result of the austerity measures jointly enforced by the local and the EU elites. On the other hand, the northern countries that made a virtue of frugality are clearly opposed to the idea of distributing economic resources in the form of funding, as they already have a good reason to assume that their own taxpaying citizens will have to cover the costs of the loans under the aegis of European solidarity. 

As a committed supporter of a European community built upon Schumanian solidarity, I am convinced that the introduction of the Eurobonds would have been the only way for the Union to mutualize the debts and neutralize the effects of the crisis that hits each Member State, just like the USA can locally dampen the negative financial impacts of the crisis in each state by issuing the so-called “T-bill” at the federal level. 

However, the idea of the Eurobonds was rejected by the April meeting of the highly influential Eurogroup that has no political legitimacy of any kind, by the way. The only remaining option is that Ms Merkel might find the mutually acceptable balance between distributing the resources as loans vs. funds. 

The other equally big challenge for the German presidency is to enforce the fundamental rule of law criteria in the budget negotiations as certain national governments are busy dismantling the rule of law while the European political elite and the public are focused on economic crisis management. 

Furthermore, the leaders of said national governments actually use the EU taxpayers’ money to solidify their regime and eliminate democracy. 

Consequently, several Member States have rightfully demanded to include the rule of law criteria in the budget act, allowing the EU, as a last resort, to withhold EU funds from such countries. 

EU politicians have a substantial experience in giving half-hearted solutions to serious conflicts of interest. The question is whether Angela Merkel is willing to blemish her political legacy with a compromise that is fatal for Europe’s future. We’ll soon know the answer. 

(Next week’s post will discuss the issues related to the Brexit deal.) 

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