The BBC reports EU Leaders Reach Recovery Deal After Marathon Summit.
EU leaders have struck a deal on a huge post-coronavirus recovery package following a fourth night of talks. The summit, which began in Brussels on Friday morning, saw more than 90 hours of talks and became the EU’s longest since a 2000 meeting in the French city of Nice, which lasted for five days.
Summit chairman Charles Michel said it was a “pivotal moment” for Europe.
The self-proclaimed frugal four – Sweden, Denmark, Austria and the Netherlands – along with Finland, had opposed allowing €500bn to be offered in the form of grants to countries hardest-hit by Covid-19. The group, led by Dutch Prime Minister Mark Rutte, originally set €375bn as the limit, in addition to wanting conditions such as the right to block requests.
At one point French President Emmanuel Macron reportedly banged his fists on the table, as he told the “frugal four” he thought they were putting the European project in danger.
Details
- The EU €750bn (£677bn; $859bn) in grants and loans to counter the economic impact of the pandemic.
- €390bn in grants to member states hardest hit by the pandemic the rest is loans that have to be paid back.
- The frugal 4 were won over by the promise of rebates on their contributions to the EU budget.
“Never before did the EU invest in the future like this,” Belgian Prime Minister Sophie Wilmès tweeted.
Blackmail in Review
Yesterday , in Italy Accuses Wealthy North European States of Blackmail I offered these comments.
Mission Impossible?
When it comes to the EU, I am skeptical of headlines like this: EU leaders struggle with ‘mission impossible’ at deadlocked recovery summit.
The Problem with Deals
The EU is known for last minute deals. In fact, there is seldom if ever a deal except at the last moment.This happens because all 27 nations have to agree to make changes of any substance.
No Surprises Either Way
I will not be surprised by a deal, but it will not be the deal Lagarde hopes for.
Instead, assuming there is a deal, it will be based on smoke, mirrors, and promises that morph into outright lies.
Deal in Perspective
- The EU collectively is nearly the same size as the US.
- The US has spent at least $2 trillion with another $2 trillion or more on deck.
- Try to imagine Nancy Pelosi or Trump bragging about $400 billion in grants to Illinois, California, and New York, paid for by the rest of the nation, with rebates to the rest of the nation for their contributions to Illinois, California, and New York.
- Every penny above €390bn is a loan.
Check, Check, Check
The frugal four will “generously” donate €390bn in grants after a fist-banging affair on the promise of rebates on their contributions to the EU budget.
How much are they really donating?
A safe guess is about half that but the way the EU plays games with leverage it could easily be about a tenth of that.
Alternatively, the rebate promise could be an outright lie.
Smoke, Mirrors, and Lies
So take your pick. What combination of smoke, mirrors, and lies is it?
Regardless, €390bn split among the hardest hit (Italy, Spain, and France) is hardly anything to crow about no matter how you parse this out.
Comic Exaggerations
For more how the EU operates on smoke and lies, please see my humorous report on how the EU’s Climate Change Effort is Comically Exaggerated.
Mish
EU is toast. They will disintegrate in the next 5 years.
“Never before did the EU invest in the future like this”
And that, is exactly the problem.
Can totally sympathise. Sweden is lost.
EU politicians know no fear as they are protected.
When they feel fear they will change.
Will only get worse until then.
Unreal to see this so obvious an extension of EU reaching straight through openly to national politics. Even pretense seems gone now, no national presentation or questioning just to business with full arrogance. I say this after reading headlines in Spain, which simply put it “PM summons all regional heads so they can decide how to spend the money”. In short nor nations nor EU had any plan to present before authorising this amount of money…just an adhoc several hundred billion to go to whatever and whoever, to be argued over later.
“€390bn in grants to member states hardest hit by the pandemic the rest is loans that have to be paid back.”
…
Sure sure … on the back half of sentence.
Everyone knows they will never pay it back. This machination purely to win passage from the recalcitrants. Once $$s given to the on the rope countries …. uhh, sorry, no way we can pay it back … and, so what, what are you going to do about it??
Mnuchin already floated the idea of recipients PPP $$ (under $150K) not having to pay ANY of it back … or even bother filing anymore paperwork for grant. Wonderful. Totally screws small businesses who did not get funds due to worrying about having to pay it back (at least some of it).
Very good report. Learned something about this confusing so called deal. This is the kind of stuff we read you for. Leave the Trump bashing to the corrupt NY Times.
Agree.
Unfortunately, notice the comments per story. Economic stories get a dozen or two (maybe) … Trump bashing? To The Moon, Alice!
Can’t fault Mish for trying to make a buck. I typically stay far far away from the political posts.
Surprised. Thought this giant squandering of good money would require two rounds of champagne.
PS: Would make it conditional on investigation why it took them a month after Asia to figure out they had a pandemic on their hands – the reason for this squandering.
What you forget maybe is that the difference in spending between the US and EU might be made up of national deficit sponsored by finance and ECB. Some of these countries are also very good at generating funds that stay off the books if gfc is any example, for example nationalisation of business underwritten by government guarantees.
So this all looks like standard EU creep and corruption. You will have an ongoing drama of north vs south regarding allocation of funding and fiscal commitment, overseen by EU which becomes empowered as arbitrator. In the south some are saying eurobonds (mutual issuance) is now a reality. You will also have southern countries offering themselves to EU oversight, various have factions in power that want the old ways and national identity changed if not deleted. Various other national political entities are also corrupt, or have interests that make them beholden to outside decision making. Now they will have that excuse “otherwise all funding stops”. The north will have access to whatever firesales go on, will gain financial influence. As for EU , it will just assume greater power, starting with taxation to repay these loans :
We (and Europe) have got to stop seeing this as red or blue states, we are all America, and same in Europe, those four are part of Europe as a whole or they are not, they need to make up their minds.
What if there is an earthquake in California, you should not have to pay for such a disaster because you believe that state squandered it’s money giving abortions to poor women? What about a hurricane hitting Florida or Texas, we democrats should not have to pay for the damage because we believe your politicians are rewarding the uber wealthy Wall Street billionaires with tax cuts and gifts to corporations so have nothing left for an emergency? And will not pay for disaster relief because it costs too much? So the blue states pay a disproportionate share of the cost because that is where the people ACTUALLY live, in urban American blue states?
The US and EU are having the same problems this way, one political subdivision does not see why it should have to pay for WRONG economic and fiscal policy of another. It has to stop or we just as they will inevitably have to go their separate ways.
Difference is that EU is comprised of countries, all of which are/were culturally different, different language, fully sovereign until more recently. If you imagine the US trying to include Mexico and Canada into its equation and give them political representation, you start to get an idea of the absurdity of EU.
Unless you are Mexico then you would love to get in on the US capital reserves (or what’s left of them) so your citizens can live better at the expense of those in more frugal countries
Only problem with your line of thought, besides the sovereign countries in the EU, and the different languages/cultures, is that, and same in the blue/red states of the US, wherever decisions are made, consequences should also be accepted. For instance, here in Illinois, the corrupt democrats have ruined the state through horrible policies, sucking up to public unions, overtaxing, welfare, etc….yet when our pension system blows up, why should ANY other state have to help bail that mess out? We ruined it, we should fix it…..its not Alabama, Florida, Texas problem that Illinois squandered its tax base. Period! This is NOT a natural disaster (even they can be planned for with rainy day funds), its a politically created disaster. Same thing in Europe….the southern countries prefer to spend and devaluate to live beyond their means, while the northern countries typically prefer to save and invest capital in productive enterprises. The southern countries are a horrible fit with the northern ones….and same deal, the northern ones shouldnt bail out the southern ones. The citizens in the northern countries save and defer spending, while the southern politicians want to pilfer those funds and squander them. If I was a citizen of the North, Id want out of this nightmare post haste. Either politically dissolve this abomination of a union, or short of that, keep your wealth outside of the system…ie precious metals.
They will keep spending until other peoples money is all used up. By all means become a supra national state but start by equalising all benefits, retirement, taxes etc. Fix budgets and take all spending decisions to the centre.
Happy now?
Thank gowd, the european FREAK show can go on, yet again ……for awhile ….
Looks like Trump’s plan is to use DHS for political purposes. He also interprets the DACA ruling as more executive power on all things. Hang on to your hat.
Worst possible news to wake up to if you live in Sweden as I do. My money won’t go to the countries worst affected by Corona but to the corrupt regimes in southern Europe where it will be embezzled. Retarded on so many levels. Ironically the only political party against this horrible giveaway is the far left party, all the rest stay silent.
b2b, if the EU suffres from “corrupt regimes” in the south who are embezzling your funds then you fix THAT problem. But you do not deny humanitarian aid to your own citizens just because you have political and cultural differences. If the union does not work then accept that and move on, dissolve the union. But, as long as you remain part of that union simply bitching about Italian or Greek proflagacy is really old. Same here in America, we either get our shit together and fix real identified problems or we go our own way. And a long time coming it is too.
Pretty much impossible to leave the Union these days. The U.K. was only able to do it because “first past the post” voting meant that a single political party was able to promise a referendum. The coalition style of government prevalent in Scandinavia could never create the conditions necessary. It was a miracle that the British voted out.
Of course Sweden has lost its national balls anyway, singing “this is your country” to immigrants, introducing “women only” days at swimming pools rather than expecting immigrants to follow the law, and accepting promotion to rape capital of Europe with stoicism.
As my Norwegian mate says “Swedish is not a nationality, it is a condition”.
Failed state in the making.
Totally agree that we should fix that problem first, but that ain’t gonna happen. And it would be far more honest to call it humanitarian aid but that’s not what they call it. Also note that I’m Swedish and used to paying about 45% of everything I earn in taxes without complaining, as long as I feel that the money is well spent but we are faaar away from that and have been for a long time, and the EU is a real sinkhole where the politicians don’t respect the taxpayer at all… Sometimes birching about it is all you’ve got 🙂
Far Left like to spend other peoples money and increase state dependence and power. Its all they know. Collectivism is all they know.