Home >Opinion >Columns >Opinion | Europe gives itself a roof over its head and a new calling card

Twenty-seven of them in all shapes, sizes and egos went in through the eye of the needle and emerged victorious on the other side, occupying the stadium with their hands and heads held high. Late last week, the European Union’s (EU) 27 countries gave themselves €750 billion to heal, help and recover from covid, but also introduced the world to the noble notion of shared debt and solidarity. In a world torn by bilateral interests hitting at the roots of multilateralism, and a United States’ Donald Trump and China’s Xi Jinping threatening war and sanctions with almost every breath, a doddering Europe would have meant a Brussels gasping for breath at a time it could least afford to. When EU Council president Charles Michael tweeted the single word “Deal" at 5.31am last Tuesday, it was as if the continent was reborn. Much remains to be done, and the road ahead will neither be easy nor without doubt and distress. But the quarrels will most likely be more on economics and less on politics. The enemy—China—is outside.

The agreement has math, and a lot of it, and all statements of discontent have been recorded. But it grants meaning to the difficulties that seasoned negotiators like German Chancellor Angela Merkel, EU Commission president Ursula von der Leyen and French President Emmanuel Macron brought to the table.

The most obdurate, according to reports, was Mark Rutte of the Netherlands. But what was at stake—European multilateralism, democracy and human rights—was far too precious to be allowed to fail. The European identity and work ethic have been built over decades, and allowing the common market to fritter away was not an option. This is an opportunity for India to engage even more with the EU, not just to ensure that multilateralism is further strengthened, but also to show the world that Europe and India are natural allies, linked by land and history.

The weekend talks were sober. There were a few photo ops and press statements, other than elbow bumps, the post-covid replacement of handshakes. On one occasion, the world saw 27 leaders sitting around a table, relaxed and chatting like the one big joint family that Europe is, or aims to be. On another, EU leaders were seen having mid afternoon coffee, which is also a rather European sign of camaraderie.

Four days of negotiations later, the countries gave themselves money to recover from the covid crisis, but also introduced the world to the idea of a shared debt. Europe’s longest summit in 20 years had allowed itself to be indebted jointly. Perhaps in this method of work is embedded a new European way to remain independent of China and, to a less extent, the US.

Those who follow European politics and negotiations will know that between a deal and its delivery come many peaks and troughs (the 2009-12 eurozone crisis is one example), but it is a fact that for the first time ever, the EU has formed a debt union.

The historic part of the deal is its one-off Next Generation EU fund of €750 billion. Meant for post-pandemic recovery and worth some 4.7% of the EU’s annual gross domestic product, €390 billion of it will be delivered to EU countries in the form of grants, and €360 billion in loans. Borrowing money collectively from financial markets is also a first for the EU, suggesting that aid is no longer an obstacle, and if one sinks, all do.

Time frames have also been set keeping in mind the economic realities of EU member countries. This is to help countries like Spain and Italy, as they were very badly hit by the pandemic.

Of the total €750 billion, €360 billion is to be paid back individually by member states in accordance with the amount of loans they receive. The grants portion of €390 billion will be collectively squared up by the EU. There are new mechanisms of governance in place that will allow members to call out errant countries, including blocking aid for up to three months if corrective measures are not taken. The EU Commission, however, will have the final say.

There is an elaborate system of borrowing and lending that is now on the table for the European Parliament to debate and hopefully vote into law. In the context of climate change and the need to mitigate it, the EU has also proposed a string of taxes that will flow into the coffers of New Own Resources, a set of carbon or green levies to be pooled, but since these are not yet agreed upon, they cannot be counted as money in the kitty for now. Since the fund was negotiated as part of the budgeting process, the famous frugal four (the Netherlands, Austria, Sweden and Denmark) as well as Germany were given discounts on their annual EU contributions.

The European Parliament has still to give last week’s deal its approval, and EU lawmakers have already signalled that they will not rubber stamp a fait accompli. We can expect long and loud debates about why and why not, but find one joint family where arguments are absent, and you get the picture.

As of now, the EU’s Recovery Fund has solidarity written all over it. It also gives member countries the language and tools needed to call out those who stray from the agenda. This is a good sign for the future of Europe’s union project.

Chitra Subramaniam is an award-winning journalist and author

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