European Council Notes 2020/04-05 - May to July: The MFF and the Recovery Fund

Abstract

The present paper resumes where the previous paper in this series concluded. At its video conference on 23 April the European Council mandated the Commission to draft a Recovery Plan, and on 21 July, at the end of a fve-day meeting, it signed off on a Recovery Fund and a revised MFF.<br/> The size and economic signifcance of the package are illustrated in the text and tables. It is big money which, because it is targeted primarily at the more vulnerable member states, should have a considerable economic impact, particularly in the South. Talk of a crossing of the Rubicon is nonetheless misplaced. Firstly because, though large, it is still much smaller than member states' Covid-related spending. Secondly, more importantly, because the politics of the agreement, which are analysed at some length in the narrative section of the paper, confrm that the leading players in Europe's Union of sovereign states have little or no appetite for the huge systemic changes which would be required to deliver on the federalists' dream.<br/> Four features of the political narrative are of particular importance.<br/> Firstly, the making of the July agreement was a success story which, in the face of widespread scepticism, confrmed that the EU can deliver. As a result, both the self-confdence of the insiders and the standing of the EU with its citizens have been boosted.<br/> Secondly, the story vindicated the Union's European Council centred system of government. Media focus on the 18 May Statement by Merkel and Macron was misleading. The story begins on 23 April and ends on 21 July with the European Council.<br/> Thirdly, individuals and institutions matter too. In institutional terms, the European Commission, the Council's rotating Presidency as well as the European Council itself have been at the heart of the process. In individual terms, Angela Merkel was once again in a league of her own, von der Leyen and Michel performed well, and the leaders of the F4, reinforced for most of the time by the Finnish prime minister, left their mark in a positive still more than a negative sense. As too did Conte and Sanchez. Macron was also important needless to say, but not as important as the French government and the international media suggested.<br/> Fourthly, the story draws attention to the limits as well as the potential of the system. Two closely related episodes since July are cited by way of illustration. In the frst, the negotiations between the German Council Presidency and the European Parliament about the budget, the parliamentary negotiators over-estimated both the powers and the signifcance of the Parliament in the system. In the second, involving the Council, the Parliament and the Hungarian and Polish governments, the latter have, as often before, challenged the shared values on which the EU system is based. On this occasion however their interlocutors have considerable leverage and, rightly in our view, appear determined to stand frm, even if, as is still possible, this puts the MFF/NGEU package at risk.