von der leyen ec
Photo: www.facebook.com/European Commission

The announcement by the European Commission of a recovery plan was hailed as an unprecedented sign of solidarity in the history of the European Union.

Certainly, the EU has never faced an economic crisis comparable to the one unfolding and this required urgent and substantial financial measures that can assist ailing member states- starts out Jobbik MEP Márton Gyöngyösi.

Far from approved, the plan and the numbers are robust. A EUR 500 billion recovery fund pooled by the EU from international stock markets and distributed to stricken member states in the form of grants and loans, coupled with a EUR 1000 billion funding embedded in the multiannual financial framework – as the seven year budget of the EU is known – looks like an adequate answer to fight the negative impacts of the pandemic. Additionally, earlier this year the EU already adopted a EUR 540 billion package, composed of financial loans and funds to help support SME’s and protects job across the continent.

VON DER LEYEN, Ursula
Read alsoEuropean Commission proposes borrowing 750 bln euros as recovery fund

However, despite the presumably good intensions of the decision-makers of the EU it might be too early to rejoice and celebrate.

Those who follow closely the evolvement of decision-making in the EU know that things are rarely as great as they appear at first sight.

Firstly, the recovery package needs approval by the European Council in one of its forthcoming summits. As we already know it there are already four member states, the so-called „Frugal Four” that oppose a Pan-European rescue package whereby the costs of assisting hard-hit, ailing member states are spread among the 27-state community.

european commission
Read alsoJobbik MEP Gyöngyösi on resolving the Kissinger-issue

According to Gyöngyösi, these states would be happier to see a higher proportion of loans and less of non-repayable grants in the package. Others are worried about the impact that such a package would have on the debt levels of some Eurozone member states. Such concerns are not entirely unfounded, as some countries like Greece, Italy and France already have a debt to GDP ratio well beyond acceptable based on the stringent fiscal requirements set out in the Euro-charter.

As the recovery package and the pooling of resources from the international money markets would not constitute a Euro-bond, i.e. a de facto transfer of debt from the member states to the EU, these countries would see a significant increase in their debt levels.

This would eventually lead to pressure from the ECB and the Eurogroup for severe austerity in years to come, which would in turn further weaken an already unstable monetary union.

Furthermore, those who criticize the EU for a lack of transparency and a democratic deficit have a point to make. In the case of the EU recovery package it is more than curious that the proposal of the European Commission was presented just a few days after Angela Merkel Chancellor of Germany and Emmanuel Macron President of France announced a deal for European economic recovery, which in all its details is identical to the Commission’s proposal. Of course, from the very beginning it is understood and appreciated that Franco-German reconciliation is the engine of European cooperation.

However, that cannot mean and certainly cannot appear to be an intransparent process of behind-the-door deals with 25 other members following suit without a word to say.
Especially in critical times where rapid action is needed, the European Community must act democratically and transparently in line with its most cherished values, otherwise it risks its future and exposes itself to the criticisms of populists ready to capitalize on their mistakes.

Source: www.gyongyosimarton.com

8 comments
  1. The so-called European ‘recovery plan’ is actually a mechanism through which the economies of France / Germany / Italy / Spain are to be STRENGTHENED by ‘contributions’ from other (usually poorer) E.U. nations – especially in Central Europe.

    As such, it is nothing more than ‘legalised theft’.

    NEM, NEM, SOHA !

  2. LickyLicky, are you aware of the numbers that are transferred from and to the EU members from the EU budget? How the EU budget is formed? Practically speaking, all Eastern Europe is a burden that only receives funds from the EU. You should be careful while appealing to the facts.

  3. For those readers who are not aware, the French / German / Italian Governments have recently NATIONALISED their respective airlines during the Coronavirus pandemic OR purchased substantial holdings within same (costing several BILLION euros for each government).

    About ten years ago, the Hungarian Government ‘re-nationalised’ Malev but this action was opposed by several E.U. nations (specifically France / Germany / Italy) on the grounds that it contravened E.U. ‘principles’ of national states NOT financially supporting businesses / industries within those countries.

    That opposition was later supported by the European Commission (dominated by France / Germany / Italy) and Malev was forced to RE-PAY all Hungarian Government subsidies (about 100 million euros).

    As a result, Malev ceased operations in 2012 with the subsequent loss of many thousand Hungarian jobs.

    Fast forward ten years and the ‘enlightened’ Governments of France / Germany / Italy have done EXACTLY the same as the Hungarian Government did back in 2010 but – surprise, surprise – there are no voices of opposition from within the European Commission.

    The truly DISGUSTING aspect of the above is that France / Germany / Italy are – in effect – expecting the rest of Europe to PAY (via the ‘European recovery plan’) for their political ‘bail-outs’ of bloated, inefficient, non-competitive ‘sheltered workshops’ which just happen to ‘fly’ the respective national flags.

    Fortunately for Hungarians, its Government – in a truly democratic fashion – is seeking the opinion of citizens about many subjects, including whether or not Hungary should ‘participate’ in the so-called ‘European recovery plan’ (which is just a re-named version of the ‘grand vision’ for Europe proposed by that nefarious money lender George Soros) and become burdened with debt for AT LEAST another generation to support France / Germany / Italy (and certain other E.U. nations).

    I concur with ‘LickyLicky’ :

    NEM, NEM, SOHA

  4. Lossuth Kajos, thank you for providing interesting facts regarding MALEV. Generally speaking, you are right, and your standpoint is reasonable. Moreover, Western European version of democracy is also quite controversial 🙂

    But there is an old saying “who pays the piper calls the tune”. Unfortunately, Hungary’s contribution to the EU is several times less than the EU funding to Hungary. To my mind, if both parts (contributions and returns) are equal, or if contributions are larger than returns, then a kind of dialogue may take place. If a country contributes several times less than receives, then it won’t work, nobody is going to pay for your lunch…

  5. What Mat fails to realise is that the so-called ‘European Recovery Plan’ will require approval from ALL E.U. nations.

    The only E.U. nation which will ‘consult’ its citizens before making any commitment to the Macron / Merkel ‘grand plan’ for rescuing France / Germany / Italy / Spain (and a few other ‘favoured’ E.U. countries) is HUNGARY.

    It is my fervent hope that Hungarians will say what their predecessors shouted 100 years ago :

    “NEM, NEM, SOHA.”

    Let France and Italy get what they deserve for dismembering Hungary at Trianon in 1919.

  6. Mat, you should also remember that part of the deal when Hungary entered the EU was that it would open its market to EU companies in return for cohesion funds.

    The Hungarian side opened its markets (see Rossmann, Mueller, Lidl, Aldi as just a few cases.)
    That’s why changing cohesion funds is a non starter in politics terms.

  7. The EU plan is devious for this reason.
    The EU will borrow money and dish it out as grants. Note grants are non repayable.
    But the loan will be repayable!!
    This will lead to a EU wide tax to pay back the loans and another big step to destroy the power of the individual states.
    The EU is notorious for breaking it’s own rules when it suits it. The Malev case is evidence!

  8. BRUCE, the state of Hungary opened its market for the EU corporations, indeed. But speaking frankly Hungarian market is relatively small in terms of its sizes and volume. Besides, purchasing power on Hungarian market is also relatively low.

    Furthermore, the EU market was opened for Hungarian corporations and Hungarian workforce. Then, lots of European corporations moved their production to Hungary (decreasing unemployment level in the country, paying taxes, and so forth).

    So all in all, I strongly believe that economic gain and positive effect has been much larger for Hungary than for the Union.

Leave a Reply

Your email address will not be published.