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EU coronavirus deal sets new standard for international solidarity

The European Union has agreed on a coronavirus recovery stimulus plan that shows miraculous cooperation, but it comes with some important concessions. 

After an intense five days of reportedly heated debate, the EU has unanimously passed a deal to aid the recovery of its member’s economies post-COVID. The agreement includes a host of ‘firsts’ in the field of international relations, including collective debt, that may provide a new benchmark for allied nations working together. However, it includes some worrying compromises regarding environmental legislation, and rule of law.

The deal was merrily announced by President of the European Council Charles Michel on Twitter yesterday at 4:31AM. ‘Deal!’ – a quick, simply declaration to summarise a complex agreement arduously reached.

Leaders from the EU’s 27 member nations gathered in Brussels for their first meeting-in-the-flesh since the pandemic – a gathering that would turn out to be its longest in 20 years. The agreement will see €750 billion pumped into the EU economy that, along with internal stimulus plans set up by each sovereign government, will hopefully keep the bloc afloat during the aftershocks of the pandemic.

The deal involves member nations borrowing money collectively, some of which will be given to struggling EU states as grants. It’s a prospect that would have seemed unthinkable just a year ago, and likely still made the toes of many northern European diplomats curl in horror; but these are unprecedented times.

EU head Angela Merkel and French President Emmanuel Macron, who led the negotiations, initially suggested a package that earmarked €500b of the €700b for grants. This was eventually watered down to €390b, with €360b handed out as loans.

The geopolitical dynamics at play pitted economically shaky southern states Italy and Spain, which have been particularly hard hit by the coronavirus, against the ‘frugal four’ Austria, Denmark, Sweden, and the Netherlands, who were reluctant to give out money hand over fist.

The Dutch Prime Minister Mark Rutte, who has a fiscally conservative government to report to, was a notably stalwart objector towards giving governments with a history of economic irresponsibility debt-free wads. He pressed for a heavier emphasis on loans rather than grants and pushed for structural economic reform conditions attached to them in order to ensure money was productively spent.

Mark Rutte

Whilst the majority of the collectively borrowed money will still be given to the neediest nations as grants, Rutte and his colleagues did manage to warrant that any country wishing to use the funds submit a plan for how they wish to spend it for other EU states to review.

Given that economists have predicted the windfall from COVID-19 will be a recession worse than WWII, it’s promising to see the EU band together in solidarity. With their spending power combined, they’ve knit together a landing pad that will catch even the weakest of their economies, ensuring the world’s strongest economic bloc doesn’t have failed states in its retinue.

It’s a great leap forward in geopolitics – such a merging of finances seems to shun the backslide into nationalism recently performed in Europe in a firm show of internationalism.

However, like all things worth having it comes at a cost.

To reach a consensus, the EU Commission had to find areas where its existing budget could be slashed. Of course, this burden landed on the climate. An ambitious project that was designed to prepare Europe for a carbon neutral future by 2030 was slashed by one-third.

Moreover, a proposed health fund evaporated entirely (somewhat ironically given the impetus behind the deal in the first place).

Concessions made to Hungary and Poland to shore up their support of the deal were perhaps the most worrying. These two nations have recently come under fire for breaching EU rule of law, garnering penalties from the union.

Both Hungary and Poland are governed by right-wing, autocratic rulers and are fast moving towards fascism. Viktor Orban of Hungary and the recently elected Mareusz Morawiecki of Poland are vehemently against LGBT+ rights, amongst other conservative values that have drawn the criticism of the international community and cast doubt on the position of the two nations in the EU.

Knowing they were in a position of power at this summit, Hungary and Poland held up the deal, which needed unanimous support, until certain sanctions placed on them by the Union were relaxed.

Not only was their money from Brussels (where the EU is based) protected and increased, despite regular questions about the use of those funds for fascist projects, but Merkel promised to help Hungary conclude bloc disciplinary measures imposed against it for violating rule of law.

Daniel Kelemen, a scholar of Europe at Rutgers University, stated that the agreement ‘looks like a disaster for the rule of law… Merkel and Macron were determined to reach a deal demonstrating the EU’s ability to respond to the crisis, and they proved willing to keep EU funds flowing to autocratic governments in order to close the deal.’

Let’s hope that the fallout from this decision won’t come to overshadow the positive move towards cooperation the deal holistically shows.

The package will now to the European Parliament, where it is expected to be ratified.