Ursula von der Leyen, president of the European Commission, proposes a major recovery plan during a plenary session of the European Parliament in Brussels, Belgium, May 27, 2020 The European Commission on Wednesday proposed borrowing 750 billion euros (826 billion U.S. dollars) in its name from the financial market to help the world's largest trading bloc recover from a recession owing to the coronavirus pandemic. (European Union/Handout via Xinhua)
BRUSSELS, May 27 (Xinhua) -- The European Commission on Wednesday proposed borrowing 750 billion euros (826 billion U.S. dollars) in its name from the financial market to help the world's largest trading bloc recover from a recession owing to the coronavirus pandemic.
The money is proposed to be channeled to member states through European Union programs and repaid over a long period of time throughout future EU budgets, not before 2028 and not after 2058.
The proposal follows an earlier initiative by France and Germany that asked for the EU's executive to borrow 500 billion euros from the financial market, all of which would then be distributed as grants to member states.
The European Commission's proposal in effect echoed that initiative and added another 250 billion euros of further borrowing, which is intended to be loans to member states. The 750-billion-euro figure was first confirmed on Twitter by European Commissioner for Economy Paolo Gentiloni, who described it as "a European turning point to face an unprecedented crisis."
Whether the proposal from Brussels will be heeded by member states remains to be seen. The French-German initiative faced push back from the so-called frugal four -- Austria, Denmark, the Netherlands and Sweden -- which called for loans, rather than grants, to member states.
To pay for the recovery proposal, Brussels anticipates new taxes on large businesses, technology companies and carbon emissions, which could also be politically difficult.
"EUROPE'S MOMENT"
The proposal comes at a pivotal moment for the EU, which is facing the dire economic prospects due to the coronavirus that have shuttered factories and services. Worries abound in that richer countries would afford more generous stimulus while poorer ones would no longer have a common playground in the single market.
Together with a revamped long-term EU budget of 1.1 trillion euros, the recovery proposal, dubbed Next Generation EU, sums up to 1.85 trillion euros. Plus a previously-agreed financing of social safety nets in the amount of 540 billion euros, the total recovery sum could reach as high as 2.4 trillion euros.
In addition to the sheer size, the 750-billion-euro proposal, if adopted, will mark a significant step towards unprecedented fiscal solidarity of the bloc.
For years, European capitals have, bit by bit, transfered parts of their sovereignty power to the bloc in matters like trade, competition and the common currency, but never has a bold fiscal integration on this scale been tried before.
Ursula von der Leyen, president of the European Commission, told the European Parliament on Wednesday "we either all go it alone, leaving countries, regions and people behind, and accepting a union of haves and have-nots, or we walk that road together."
A meeting of the European Council, made up by heads of state or government of the 27 members, has been scheduled for June 19 to discuss the proposal. Enditem
