{"id":13672,"date":"2020-07-23T12:04:22","date_gmt":"2020-07-23T11:04:22","guid":{"rendered":"https:\/\/www.worldpolicyconference.com\/?p=13672"},"modified":"2020-07-23T12:07:39","modified_gmt":"2020-07-23T11:07:39","slug":"angela-merkel-guides-the-e-u-to-a-deal-however-imperfect","status":"publish","type":"post","link":"https:\/\/www.worldpolicyconference.com\/fr\/angela-merkel-guides-the-e-u-to-a-deal-however-imperfect\/","title":{"rendered":"Angela Merkel Guides the E.U. to a Deal, However Imperfect"},"content":{"rendered":"

By\u00a0Steven Erlanger\u00a0and\u00a0Matina Stevis-Gridneff<\/strong><\/p>\n

July 21, 2020 – The New York Times<\/p>\n

With her long experience as German chancellor, she shapes a necessary compromise on virus aid for the battered European south. But it\u2019s consensus at a cost.<\/span><\/p>\n

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Chancellor Angela Merkel of Germany and President Emmanuel Macron of France after their video news conference at the end of the E.U. summit meeting in Brussels early Tuesday morning.\u00a0Credit…Pool photo by John Thys<\/p>\n

BRUSSELS \u2014 After days and nights of rancorous haggling, European Union leaders reached an $857 billion pandemic recovery plan on Tuesday that, for the first time, committed them to borrow money collectively and distribute much of it as grants that do not need to be repaid by the countries hardest hit by the virus, like Italy.<\/p>\n

But as the dust settled after the marathon negotiations \u2014 the European Union\u2019s longest summit meeting in 20 years \u2014 the compromises that allowed\u00a0Chancellor Angela Merkel of Germany<\/a>, whose country holds the E.U.\u2019s rotating presidency, to guide 27 nations toward consensus became all the more apparent, and none were too pretty.<\/p>\n

The fissures in the bloc that Ms. Merkel needed to bridge ran up, down and sideways. There were divides between the frugal north and a needy, hard-hit south; but also west to east, between Brussels and budding autocracies like Poland and Hungary that have tested the limits of the bloc\u2019s liberal democratic values.<\/p>\n

But allowing the crisis stirred by the pandemic to worsen was in the end considered more dangerous than trimming some of the bloc\u2019s larger budgetary ambitions or even allowing continued challenges to the rule of law.<\/p>\n

The compromise that got most attention was between President Emmanuel Macron of France, who pushed for large-scale grants to southern European countries like Italy and Spain hit hardest by the pandemic, and Prime Minister Mark Rutte of the Netherlands, who pressed for more loans than grants and for structural economic reforms in return.<\/p>\n

But how Ms. Merkel mollified the prime ministers of Hungary and Poland, Viktor Orban and Mateusz Morawiecki, may prove more consequential.<\/p>\n

Not only was their money from Brussels protected and increased, despite regular questions about the misuse of those funds and efforts to condition the aid on adherence to the rule of law, but she promised to help them conclude bloc disciplinary measures against them for their alleged anti-democratic abuses.<\/p>\n

\u201cPrime Minister Orban told me he wants to take the necessary steps and does not want this to hang in the air,\u2019\u2019 Ms. Merkel said early Tuesday about the disciplinary procedure that had been opened against Hungary. \u201cWe will support Hungary,\u2019\u2019 she said, \u201cbut of course the crucial steps will need to be taken by Hungary.\u2019\u2019<\/p>\n

That concession, little remarked upon, may have sealed the agreement, even if it outrages critics who think that Brussels is showing weakness in the face of abuses of bloc laws and values by some Central European member states. And that aspect of the deal may end up being the most contentious in the European Parliament, which must approve it.<\/p>\n

The agreement \u201clooks like a disaster for the rule of law,\u2019\u2019 said R. Daniel Kelemen, a scholar of Europe at Rutgers University. \u201cMerkel and Macron were determined to reach a deal demonstrating the E.U.\u2019s ability to respond to the crisis, and they proved willing to keep E.U. funds flowing to autocratic governments in order to close the deal.\u2019\u2019<\/p>\n

Still, by tying the recovery fund into the seven-year budget, the first without Britain, they managed to solve two extremely difficult and tendentious problems at once. For all its messiness, there was little doubt that what they had achieved for the bloc was groundbreaking.<\/p>\n

Ms. Merkel understood that failure would badly undermine the new leaders of the European Union itself \u2014 Council President Charles Michel and Commission President Ursula von der Leyen, a former member of Ms. Merkel\u2019s government.<\/p>\n

Having joined with Mr. Macron in supporting a virus recovery fund borrowed for collectively \u2014\u00a0a first<\/a>\u00a0\u2014 she then patiently worked for consensus, understanding the political needs of both Mr. Macron, whose expansive vision for the E.U. remains unfulfilled, and of Mr. Rutte, whose government hangs by a thread, depending on politicians even more tightfisted than he.<\/p>\n

Mr. Macron and Mr. Rutte proved themselves two sometimes angry, sometimes emotional leaders of the two main contending groups, and the weekend talks were unusually acrimonious.<\/p>\n

With Britain gone, Mr. Rutte and his Austrian counterpart, Sebastian Kurz, have stepped forward to create a bloc of smaller countries, known as \u201cthe frugals,\u2019\u2019 which are trying to restrain the big-spending, integrationist ambitions of Mr. Macron and the poorer southern countries.<\/p>\n

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Prime Minister Mark Rutte of the Netherlands led a group of countries, including Austria, Sweden, Denmark and often Finland, that became known as \u201cthe frugals.\u201dCredit…Pool photo by Stephanie Lecocq<\/p>\n

But while they came to Brussels saying that they were opposed to any outright grants based on collective debt, it was obvious that there would be some once France and Germany pushed for them.<\/span><\/p>\n

Then the only question \u2014 however difficult \u2014 was to negotiate an amount and some mechanism to monitor the spending, so that everyone could go home talking of victory.<\/span><\/p>\n

France and Germany had proposed 500 billion euros in grants; the Commission took that and added another 250 billion in loans; in the end, after intense squabbling, the balance was 390 billion in grants and 360 billion in loans.<\/span><\/p>\n

Still, that is a remarkable victory for Mr. Macron, who has broken a major taboo on creating collective debt and built a possible architecture for handling future crises \u2014 if Ms. Merkel\u2019s successors agree.<\/span><\/p>\n

For the future of the euro currency, the elephant in the room is Italy, the bloc\u2019s third-largest economy by most measures, and already drowning in debt. Italy is both one of the least reformed economies in the eurozone and one of the hardest hit by the virus.<\/span><\/p>\n

So while both groups agreed that Italy must be a major beneficiary of funds that do not increase its already sizable debt pile, Mr. Rutte and his group \u2014 including Austria, Sweden, Denmark and often Finland \u2014 also wanted tough monitoring on the use of those funds. And they wanted member states to have a say in that monitoring, not just the Commission, the bloc\u2019s unelected bureaucracy, which they regard as weak and often blind to abuses.<\/span><\/p>\n

That could create significant bitterness for the future. But for now, bending to reality, the \u201cfrugals\u2019\u2019 in return got the numbers down, got some form of state monitoring and got paid off with higher rebates in the budget.<\/span><\/p>\n

\u201cDespite all this progress, we should not delude ourselves,\u2019\u2019 said Friedrich Heinemann, research department head at ZEW Mannheim, the Center for European Economic Research. \u201cThe lack of competitiveness and low growth prospects in countries like Italy cannot be solved with transfers and loans from Brussels. Only comprehensive reforms of labor markets, public administration and the education and innovation system will help.\u201d<\/span><\/p>\n

 <\/p>\n

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Naples, Italy, last month. Italy, the European Union\u2019s third-largest economy, is seen as the member most affected by the coronavirus pandemic.Credit…Gianni Cipriano for The New York Times<\/p>\n

Others were angered by the concessions to Mr. Orban, in particular, which may plant the seeds for future conflict.<\/p>\n

\u201cPlanned sanctions for E.U. member states that violate fundamental rights and the rule of law have been watered down beyond recognition,\u2019\u2019 said Daniel Freund, a German European legislator from the Greens. By now requiring a reinforced majority to impose sanctions, \u201cthe whole mechanism is rendered useless.\u2019\u2019<\/span><\/p>\n

Ms. Merkel clearly decided she needed the fund more and \u201chas always been lenient on Orban,\u2019\u2019 he said. The result, he said, puts leaders \u201con a collision course with the European Parliament and makes a quick agreement unlikely.\u2019\u2019<\/span><\/p>\n

 <\/p>\n

\"\"<\/a><\/p>\n

Prime Minister Viktor Orban of Hungary, third from right, with the leaders of the European Council, the Czech Republic, Poland and Slovakia on Sunday.Credit…Pool photo by Francois Walschaerts<\/p>\n

Not least, to reach consensus, the E.U. ended up with a smaller post-Brexit European budget, and one that eliminates or reduces spending for some ambitious projects designed to prepare Europe for the future \u2014 like in research and climate transition, a fund to promote consensus on carbon goals for 2030 that was slashed by one-third.<\/p>\n

Even with the virus, a proposed health fund evaporated entirely. There were also reductions from Commission proposals in other areas of investment, foreign policy and defense.<\/p>\n

Ms. von der Leyen called it \u201ca difficult point\u201d and said that such cuts, made in the search for a compromise, are \u201cregrettable, it decreases the innovative part of the budget.\u2019\u2019<\/p>\n

\u201cIt was all about give and take, so the victims seem to have been the E.U. public goods, which deliver value added to all,\u2019\u2019 said Jean Pisani-Ferry, a French economist, in\u00a0a Twitter message<\/a>. \u201cThe price of the deal looks high.\u201d<\/p>\n

\u201cThis is not frugal. This is stupid,\u2019\u2019 said Henrik Enderlein, a German economist who heads of the Hertie School of Governance in Berlin,\u00a0in a Twitter response<\/a>. But he also applauded the larger deal and the recovery fund. \u201cWe shouldn\u2019t be frugal in our judgment,\u2019\u2019 he said. \u201cThis is historic.\u201d<\/p>\n

As Mr. Enderlein noted, the summit must be considered a breakthrough in a time of crisis when the European Union, now without Britain, could not be seen to fail. European fights about money and budgets are never pretty. But Ms. Merkel more than most understands that for all the talk of European solidarity, the European Union only proceeds when its varied leaders can convince their voters that they have fought the good fight for national interests.<\/p>\n

As Janis Emmanouilidis, director of Studies at the European Policy Centre, commented:<\/p>\n

\u201cThe price of no deal would have been much higher \u2014 potentially incalculable both economically and politically at the E.U. and national level.\u2019\u2019<\/p>\n

But however important, this deal cannot be the last, he suggested, noting: \u201cWe are still at the beginning of the Covid-19 crisis.\u2019\u2019<\/p>\n

Steven Erlanger is the chief diplomatic correspondent in Europe, based in Brussels. He previously reported from London, Paris, Jerusalem, Berlin, Prague, Moscow and Bangkok.\u00a0@StevenErlanger<\/a><\/p>\n

Find the original article on The New York Times.\u00a0<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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