Germany prepares to lend heft to recovery
EU presidency seen as opportune time for Berlin to help steer bloc out of crisis
Germany hopes that its European Union presidency starting on Wednesday will not only help the bloc recover from the ravages caused by the COVID-19 pandemic but embark on a future-oriented path.
The bloc’s economic powerhouse will replace Croatia to assume the rotating presidency of the Council of the European Union from July 1 to Dec 31. Chancellor Angela Merkel said on Monday that she hoped the EU leaders would agree on their next budget and a coronavirus recovery fund at a summit scheduled for July 17-18.
The 1.85-trillion-euro ($2.08 trillion) recovery package would include 1.1 trillion euros from the 2021-27 long-term budget and 750 billion euros raised from the financial markets. Of the 750 billion euros, 500 billion euros will be given as grants and the rest as loans.
“We hope we can find a solution, even if there is still a long way to go,” Merkel told a joint news conference in Germany with French President Emmanuel Macron following their first face-to-face meeting after the novel coronavirus outbreak. They called on EU leaders to reach a deal by the end of July to revive an economy hit hard by the pandemic.
But the so-called Frugal Four, comprising the Netherlands, Sweden, Denmark and Austria, have called for responsible spending and want more loans and less grants.
The pandemic has infected over 2.4 million people and claimed more than 190,000 lives across Europe. The region is experiencing an economic shock without precedent since the Great Depression, as coronavirus lockdowns have ravaged its economy. “We are taking on this role in a situation the like of which the EU has never before experienced,” Merkel said of Germany’s presidency in a podcast on Saturday.
Together for Europe
Germany’s presidency is promoting a motto “Together for Europe’s recovery”. And Merkel said Germany will do everything in its power to achieve the goal.
Shada Islam, an EU commentator and former director of Europe and Geopolitics at Friends of Europe, a Brussels-based think tank, said that Germany is certainly taking over the EU presidency at a pivotal moment for the bloc. Given its traditional role as the EU’s de facto leader, all eyes will be on Berlin in the coming months, both for questions related to domestic European challenges and foreign and security policy questions.
“Germany will have to work very hard to secure an EU agreement on the new global green recovery fund and the EU post-pandemic budget which is linked to it — this is a top EU priority for combating the economic slowdown and allowing EU governments the fiscal space they need to boost recovery,” she said.
Berlin will have to try to find common ground between the Frugal Four states and those demanding more flexibility in the EU’s financial response, though “it is going to be a difficult decision”, she said.
It will be the last time that Merkel is in charge of Germany’s rotating presidency, and there are high expectations of her.
Sven Biscop, director of Europe in the World Programme at the Egmont-Royal Institute for International Relations, a Brussels-based think tank, also said it certainly is a fortunate coincidence that Germany assumes the presidency at this difficult time.
“We are already seeing how Germany, together with France, is taking the lead in putting creative and far-reaching proposals on the table to support EU member states in recovering from the pandemic,” he said. “That is the EU’s main challenge, of course, and if the traditional Franco-German axis can bring the EU to novel responses. That will be a boon for the integration project.”
Islam said that apart from the bloc’s recovery from the pandemic, Germany also has other burning issues to tackle during the rotating presidency, such as getting agreement on a new migration pact among member countries for the relocation and redistribution of migrants that are heading to Europe.
“Now that Brexit is back on the agenda, bringing those negotiations to a conclusion and ensuring that the EU’s relationship with Britain will remain on track, given important trade and economic considerations, but also the future of European and British citizens, will be a big responsibility for Berlin,” she said.