EU’s economic recovery depends on collective effort - Minister

European Union – Excerpts from the interview given by Mme Amélie de Montchalin, Minister of State for European Affairs, attached to the Minister for Europe and Foreign Affairs, to Public Sénat

Paris, 2 June 2020

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COVID-19/opening of EU borders

Q. – A question about borders. Are we perhaps moving towards 15 June for opening up the borders between European countries? Or how does it work? We get the impression that not all countries are singing from the same hymn sheet or pulling in the same direction.

THE MINISTER – Well, for a start we can’t have complete harmonization on this because the virus hasn’t spread at the same time, it hasn’t spread at the same rate and so it’s natural... that basically everyone also has a health situation to manage which isn’t exactly the same and still isn’t the same today. Comparing what’s happened in Italy, Spain, France, Belgium and the United Kingdom, we’re all in quite different situations. The key thing is that we’re coordinated and no one takes measures which jeopardize the positive progress various countries have made in terms of health. The goal I, Jean-Yves Le Drian, Christophe Castaner and Laurent Nuñez have is to ensure we are coordinated with our neighbouring countries. We’ve worked a great deal on this over the past few weeks and months. We’re getting there and indeed we’d like to be able to suspend most, the majority of the [border] controls, particularly, indeed, on this date of 15 June. We remain very vigilant; if things change we need to remain flexible. The key thing for me is that on Friday I’m going to Germany, to the Franco-German border between the Moselle department and Saarland. It’s a place where there’s been a lot of solidarity, with, among other things, transfers of patients Germany took in. It’s somewhere we’ve also done a great deal of work on in terms of the border community area so that workers in particular can cross borders and families can go and visit their loved ones. I’m thinking especially of children and elderly people on both sides, so that we can indeed coordinate the lifting of controls as swiftly as possible and get things moving again. This must be done in a coordinated way.

Now I can tell you that it’s natural for there to be no harmonization, because the virus hasn’t affected us all in the same way. (...)

EU economic recovery/budget negotiations

Q. – We’re going to talk about the economic recovery, because the European Commission presented its own recovery plan for the European economy a few days ago. So to detail it briefly: there’s €500 billion of subsidies for member States, which incidentally was an initiative of the Franco-German plan. There’s also €250 billion of loans. And then this money is going to be incorporated into a European recovery budget, between 2021 and 2027, which will amount to €1,850 billion. Is that it? Has Europe delivered?

THE MINISTER – Well, we’ve in fact got to resume things in stages and understand what’s at stake today. There are in fact two major challenges ahead of us. Firstly, the challenge of bouncing back, a recovery: how do we emerge from this economic crisis? How do we emerge from it together? We massively depend on each other, it’s created our prosperity, it mustn’t become a weakness. Today, whilst in France we’re continuing to help our businesses – and doing so a great deal –, we can’t magic up customers for them and if their customers are in Italy, Germany, Spain, Slovakia or wherever, these customers must be able to place orders with them. So our economy as a whole must start up again, and this is what the recovery plan is all about. It’s basically about the plan’s ability to ensure we can bounce back, collectively, so that we genuinely bounce back because if each of us bounces back on our own, each of us won’t bounce back as far as we’d be able to together.

And secondly, there’ll be the whole challenge of investment: what do we as Europeans want to do for the coming decade? How do we face up to China and the United States? How do we protect our agriculture and food independence? How do we protect our industry and digital sector? How do we put resources into electric cars, for example? All these issues aren’t for the next 18 months or two years; they’re for the next decade. And so this is where we’ve actually created an ambition with this European budget. I’ve been conducting tough negotiations for a long time now because they’d already been launched before the crisis. They’re becoming all the more urgent because these sovereignty issues are upon us more than ever. The Franco-German initiative, which was put together on account of this, is probably one of the most important moments of the five-year term. It’s a moment when France and Germany reached agreement, not on the lowest common denominator, they aren’t summarizing their differences, they’re saying, “this is our vision for Europe; we want a Europe which is sovereign on health, we want a strong Europe playing a leading role in the ecological transition. We want a European industry which can assert itself: let’s give it the means.” This is how we arrived at the €500 billion and also at the idea that this European budget, lasting until 2027, absolutely had to be ambitious and consistent with the digital transition, the ecological transition and so really get us to think of our power, our credibility and our sovereignty as Europeans.

Q. – For this to happen, you’ve got to get the 27 member States to agree; you’re the one who’s going to lead the negotiations and take charge of this. There are four countries from the North, the so-called frugal countries – the Netherlands, Austria, Sweden and Denmark – to convince; they aren’t very enthusiastic about the subsidies part. How are you going to proceed?

THE MINISTER – We’re seeking an agreement before the beginning of July, because if we’re talking about recovery, there’s no point agreeing once things are finished; after all, we need to support this emergence from the crisis, so things have got to move quickly.

There’ll be a heads of State and government summit on 18 June and indeed we’ve got a few countries distancing themselves today. They’re saying, “If there are countries in need, we just need to give only to them”.

I’ll take one example: Sweden. Sweden, as you know, is a country that hasn’t implemented the same lockdown as other countries but which, despite that, is going to have a 7.8% fall in its GDP or maybe even more, because it’s an extremely export-based country. And so while Swedes themselves have perhaps been consuming, I mean living, more normally than us, who have experienced a firmer, stricter lockdown, they still don’t have customers. And so what I say to Sweden is: let’s not get into theoretical debates, let’s not indulge in the luxury of spending time on debates that are objectively from another era, let’s look at the facts. The facts are that it’s no good you alone, the Swedes, flooding your economy with money; if the countries your businesses export to don’t restart, well, your economy won’t [restart] either.

So I think this idea that we’re not each an island [is right] and there are countries which do have the resources, but their resources alone are tremendous for them but won’t allow them to restart unless their neighbours are doing better. And it’s this vision of our interdependence which means, today, that you have countries that are progressing, and so you have Austria, Denmark, Finland, the Netherlands, which are really seeing today that they can’t get through this alone. Germany has great financial power. Why is it proposing to put €500 billion in subsidies on the table? Because it clearly sees that its economy at home won’t start up again unless Italy starts up again, unless Spain starts up again, unless the countries east of Germany start up again too. And they’ve been very hard-hit by the consequences of the health crisis we’ve just been experiencing.

EU subsidies

Q. – And on the negotiation of this €500 billion in subsidies, can France make concessions and reduce the sum of those subsidies, or is France remaining intransigent?

THE MINISTER – We’re not at that stage yet, we’re not at the stage of making concessions; you can clearly see we’re not going to have European sovereignty at 80%. You either create it or you don’t. So if I say to you we want a plan in the aerospace sector, we want a plan for electrification in the automotive sector, we want a plan for the energy transition, we must genuinely create it.

If we say to ourselves, we’re going to look at the needs – for example, of a sector like tourism; we’ve just talked about it –, we have to put the resources there. And so today we’re not adjusting figures, we’re already laying down the principle whereby we all agree we can only get through this together, and that getting through this together means putting in resources which are genuinely shared.

The big revolution, if I can put it that way, is that we’re entering into a different debate from what was already the case now at European level, which was this fair-return approach. I put so many euros on the table because I want to get exactly the same sum back. It’s Margaret Thatcher’s famous phrase “I want my money back”. It’s greatly damaged the European system, because in the internal market there are things we benefit from that aren’t exactly linked to how much we put on the table, that’s our collective dynamic, and I think today this crisis has shown us how interdependent we are and therefore how much we have to put in together in order to really take off again economically, socially, and prepare for the future.

Health Europe

Q. – Well, this recovery involves a rather ambitious European budget between 2021 and 2027; Emmanuel Macron wants to create a Health Europe, a Europe that is sovereign in terms of health. In practical terms, what’s it going to look like?

THE MINISTER – There are three stages. First of all there’s the ability to monitor, follow epidemics, and we can clearly see that if across Europe we’d all had a bit more of this ability to predict, I think we’d all have been in a better situation. So that’s the first capability. Secondly there are issues of reducing our dependence on the outside for essential products, certain medicines: we’ve talked in particular about resuscitation medicines, protective equipment, masks, we think we may need to support the revival of a genuine production economy for those goods in Europe, in order to have them on our continent, to export them elsewhere, but to have the production capabilities in our countries.

And there’s also a third aspect, namely a research aspect. To be a continent which, on vaccines, on cancer, on all age-related illnesses… well, is a continent that is already very advanced but becomes a real leader that can also propose solutions. As you know, when people say we’d like to make the vaccine a global public good for fighting the coronavirus, it’s much easier to do if you have the research in your country, if you have in your country the means to offer those kinds of things subsequently to countries that are less advantaged.

Green recovery

Q. – The other challenge in this budget is the green recovery. In practical terms, how can it be put in place?

THE MINISTER – It’s being put in place in every sector. Ecology is neither the prerogative of one party nor a sector in itself any more. We must reform how we produce our food, how we travel, how our industry functions. We must also think about our imports; that’s why the President – and we’ve made a lot of progress – upholds what we call a carbon border adjustment mechanism, a carbon tax at the borders. You can’t introduce extremely harsh but desirable standards in a number of sectors and also continue importing products where you don’t take into account the difference in the amount of CO2 emitted elsewhere.

Q. – On that point, is it likely there will soon be a carbon border tax?

THE MINISTER – It’s in the Commission’s plan. A lot of countries have joined us. It’s also an issue where we’ve made huge progress in recent months, because we can really see there’s a kind of clear-sightedness about the fact that ecology isn’t an issue solely for speeches, it must now enter every economic field. And so at least 25% of the recovery plan I’m talking to you about, this European budget, is strictly dedicated to the climate, but all that expenditure must be consistent with this transition. And so we’re going to invest heavily in every field.

Q. – And let’s talk about taxation, because at some point we are indeed going to have to finance this recovery and this European budget. Is a European tax going to be created?

THE MINISTER – What we argue is that you can’t indefinitely place the burden of effort on taxpayers, businesses or individuals, who already pay too many taxes – and given the situation, we’re not going to increase them, but we can clearly see we have no ability to increase taxes. That’s not what we’re seeking to do, it’s not our vision at all. On the other hand we can see that some people don’t pay enough taxes – I’m thinking of the GAFA [Google, Apple, Facebook, Amazon]. After all, in terms of tax justice you have some people who are going to benefit from the recovery, who are going to benefit from the whole economy we’re going to recreate; can we make them contribute a little more? That’s a goal we’re pursuing, and we’re making progress, at European level too. I’ve talked to you about imports. The carbon border tax is also a good way of saying, “well, there you are, we’ve created an economic area of prosperity, you import products from us, why not? Now we must be able to see whether we’re consistent in terms of CO2”. So those are the kinds of things we’re going to push for.

What’s interesting today is that there’s been a lot of movement on the policies, when you consider the situations a year and a half ago and today. A lot of those debates have now become interesting, when previously everyone took positions somewhat on principle. I think today everyone fully understands the importance of moving forward. (…)./.

Published on 12/06/2020

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