Parliament of Finland
Chairperson of the Finns Party Parliamentary Group,
Throughout the second half of 2020, the most important non-COVID-19 topic in European politics has been EU’s 750 billion “recovery fund”. In carefully crafted rhetorical speeches the fund is justified by the ongoing coronavirus situation, but actually this virus is utilized as an excuse to distribute 390 billion euros as grants and 360 billion in loans. The conditions for getting money from the fund have little to do with the epidemic.
While the coronavirus situation and its financial consequences should of course be taken seriously, one has to wonder this elephant in the room: Transferring 750 billion euros was planned without referendums, and while the very rules of the European Union are stretched to their extreme limits, probably even broken. Why are the member states so silent about all this?
More precisely: Why are the Baltic Sea region countries so silent? The Baltic Sea region countries are financially stable and rather well-to-do members in the European Union, while big receivers of the recovery scheme would include Southern European countries like Italy and Greece. The final and exact numbers for each country remain unclear for now, but the fund was planned to be created by a loan that the Commission would take from markets. Following this, the regular membership payments of the member states would increase and the loan would eventually be paid back from the Union’s budget. In overall, the fund plan is turning the EU into a socialist income redistribution union.
The Baltic Sea region could greatly benefit from a real free-trade area, call it EU or something else. Unfortunately, the current situation of the EU is getting closer to socialism than free trade. This is a direction that the Baltic Sea region must oppose for its own prosperity.
The core issues in Italy’s economics, for instance, are in the political and societal system, not in the coronavirus. The recovery fund is like having Northern European countries pour water into the dry wells of the South. After a while, another “exceptional” funding will be needed again.
The first bailout of Greece was supposed to be a unique arrangement that will never happen again. The same was said about the bailout of Portugal, the second bailout of Greece, and so on. We already know the script very well. Perhaps that is why the German Finance Minister Olaf Scholz boldly said in August 2020 that the European Union’s recovery package is a long-term measure rather than just a short-term coronavirus crisis fix. Although my opinion on the new fund differs from Scholz’s, I appreciate his honesty.
One has to wonder if the current Union is what people in the Baltic Sea region wanted and expected when they joined the European Union. Finland and Sweden joined the EU in 1995. Estonia, Latvia, Lithuania and Poland followed in 2004. Denmark has been in the EU since the 1970s and Germany since day one. In 2020s, the time is ripe for asking a fundamental question: Is this the same Union that we joined long ago?
The Union has traditionally been against joint debt, but not anymore. Both the Union and its biggest members have spoken against joint debts, but with the historic 750 billion recovery scheme, leaders have shown green light. This is a turning point for the EU, as important as the Treaty of Lisbon.
Financial aid for mainly Southern European countries is advocated as an investment. For Finland, different bailout deals are already our biggest investment after the World War II. When one adds the regular EU membership fees to the calculation, being in the EU is one expensive investment.
Some Baltic Sea region countries are still on the receiving side of EU’s internal money circulation, but this may change when the euro crisis goes further on.
The Baltic Sea region countries must speak louder about their own interests. Some of the region’s countries are relatively small, but together we can achieve more.
In the recovery scheme negotiations we all noticed an alliance called the Frugal Four. Together those four EU members had more authority and influence in the recovery fund negotiations than they would have had as solo players. If the Baltic Sea region countries form a similar cluster, we can better achieve our national and shared goals in Brussels and Strasbourg.
Expert article 2805
To receive the Baltic Rim Economies review free of charge, you may register to the mailing list.
The review is published 4-6 times a year.