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The path to economic recovery in Europe may already be mapped out.
Over the past 18 months, four of the bloc’s institutional leaders have met behind closed doors to help chart the eurozone’s recovery as the pandemic threatens to leave long-term economic scars in its wake.
Strictly private, the meetings between the President of the European Council Charles Michel and Christine Lagarde of the European Central Bank, Paschal Donohoe of the Eurogroup and Ursula von der Leyen of the European Commission focused on the fiscal and monetary policies necessary to prevent an economic disaster did materialize, according to seven officials familiar with the forum and a backgrounder obtained by POLITICO.
With the coordination effort designed to pull the European economy out of a record recession, the talks have already paved the way for key economic policy decisions, including maintaining EU deficit rules until the end of 2022.
Ahead of this week’s eurozone leaders’ summit, leaders met on Tuesday to set the stage for talks on the recovery and stalled efforts to promote greater banking integration in the eurozone, with Valdis Dombrovskis of the Commission replacing von der Leyen who was traveling abroad.
But without a recording of the presidents’ meetings, the relaunch of the crisis planning group that initially assembled during the last economic crisis has also raised concerns about the lack of accountability and transparency on discussions impacting the European economy.
European Parliament President David Sassoli is not attending and several MEPs said they were unaware the meetings were taking place, despite Michel having been organizing the rallies since December 2019.
“We have a problem with not only informal bodies, but any meeting or body, whether formal or informal, when it comes to accountability and transparency gaps,” said Vitor Teixeira, coordinator of EU political integrity for the NGO Transparency International EU. “Especially, when we now talk about the meeting of the four presidents, because they are talking about monetary policy and economic policy.”
The crisis talks
The crisis group has already met: Herman Van Rompuy, President of the European Council from 2009 to 2014, set up the forum at the height of the sovereign debt crisis when he threatened to dismantle the euro zone.
The coronavirus is not about to shatter the eurozone, but single-currency Union countries are racking up a mountain of debt to fight the pandemic, and the Commission has urged governments to watch their finances closely. Belgium, Cyprus, France, Greece, Italy, Portugal and Spain all have debt exceeding 100 percent of economic output. The broader fight against climate change is also looming.
“The risk of an uneven recovery across countries and sectors is very real,” Donohoe wrote to EU leaders in a letter ahead of Friday’s summit. â€œThere remains a pressing need to continue to support the recovery and coordinate our collective responses. “
While no formal decisions are made in the closed-door presidents’ meetings, the discussions are substantial.
Earlier this year, they discussed fiscal policies that finance ministers should follow to ensure EU businesses and workers are slowly weaned from public support, according to a March briefing seen by POLITICO. The talks paved the way for a Commission strategy suggesting that the EU continues to allow countries to break debt rules.
â€œMember states should avoid premature withdrawal of budget support to their economies,â€ the note from von der Leyen’s team reads. â€œFiscal policies should also take into account the strength of the recovery and medium-term fiscal sustainability considerations. “
The six-page note also referred to plans to revise longer-term EU deficit rules, which policymakers deem too complicated and restrictive to deal with future challenges of high debt and climate change.
Officials close to the forum said the discussions were far from secret, citing a press release and tweets from Michel spokesperson, as well as Donohoe, The guard and von der Leyen. In March, Michel said the group “was exploring different avenues to respond to the socio-economic consequences of the pandemic.”
Not everyone agrees that there is enough visibility. “I haven’t seen it,” said Belgian MEP Johan Van Overtveldt, who was finance minister for four years under Michel’s government when he was prime minister.
â€œPerhaps not surprising given the urgency of the pandemic. But no, I haven’t seen any initiative, invitation, announcement or anything,â€ said Van Overtveldt, who now sits as the group’s whip. European conservatives and reformists in the parliamentary committee on economic and monetary affairs.
The coronavirus has forced most online meetings and each lasts up to 90 minutes. Michel usually opens the meeting before von der Leyen speaks, followed by Lagarde and Donohoe, officials said.
Under Van Rompuy, presidents would meet in Council for lunch – although appetites do not always mingle with crisis speeches, with plates and cutlery often set aside.
This arrangement fell into disuse after the sovereign debt crisis. Van Rompuy’s successor Donald Tusk made little use of the presidential format during his five-year reign, as Brexit and the EU’s migration crisis replaced fears about financial stability. Michel reinstated meetings in December 2019.
Presidents will move on to other high-level topics once the health crisis passes, officials said. These include reforming the bloc’s spending rules and breaking the political deadlock over the introduction of a shared deposit insurance system and the development of a digital euro.
Longtime EU lawmaker Sven Giegold from the Greens group has expressed unhappiness that the European Parliament is not involved in the talks and called on Michel to â€œreconsiderâ€ the composition of the group.
“This is a coordination meeting, not a decision-making meeting,” said a spokesperson for Michel when asked if more needs to be done to make the meetings more transparent. â€œEach institution discusses or makes its decisions within its own relevant framework.
A spokesperson for the President of the European Parliament said Sassoli had no problem not attending the meetings, “because all decisions have to go through Parliament”.
Transparency aside, some legislators and treasury officials outside the euro area fear that Brussels policymakers are neglecting their economic policy concerns and focusing too much on the single monetary union.
“The coordination of economic policies should involve all member states and there are no differences between euro area countries and countries outside the euro area,” said liberal Czech parliamentarian OndÅ™ej KovaÅ™Ãk, who was not no longer aware of the meetings.
That won’t be a problem, according to someone familiar with the forum. Michel called on all EU leaders to attend summits of eurozone countries, they said, adding that this concern would become less relevant over time, especially now that the UK has left the EU.
Either way, “the strength lies in the Single Market of the 27 and I think the common approach, including tax incentives, will be a big part of the success of the recovery,” said KovaÅ™Ãk. â€œThis should be taken into account by all parties involved. “
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