If the European Union’s new recovery fund is to achieve its aim, the soft money it promises should come with hard standards designed to prevent rule-of-law breaches and ineffective government spending by member states. Unfortunately, this looks unlikely to happen.
PARIS – Back in July, the announcement of the European Union’s new €750 billion ($918 billion) recovery fund, dubbed Next Generation EU, was widely (and rightly) regarded as revolutionary. Never before had the EU borrowed to finance transfers and cheap loans to help member states recover from a major economic shock. By breaking longstanding taboos, the initiative may even pave the way to a fiscal union.
But the EU cannot achieve its aims unless soft money comes with hard standards. Money from heaven can be both a blessing and a curse. If spent well, it can end political stalemates and trigger economic revivals. But if distributed indiscriminately, it encourages state capture and pork-barrel politics. The recovery funds should uphold the EU’s values and serve well-defined goals.
For its commendable ambition not to be subverted, the EU must be able to say no to member states, both when elected autocrats openly trample on European principles while using EU money to harden their grip on power, and if governments’ proposed spending programs fail the effectiveness test. Unfortunately, this looks unlikely to happen.
PARIS – Back in July, the announcement of the European Union’s new €750 billion ($918 billion) recovery fund, dubbed Next Generation EU, was widely (and rightly) regarded as revolutionary. Never before had the EU borrowed to finance transfers and cheap loans to help member states recover from a major economic shock. By breaking longstanding taboos, the initiative may even pave the way to a fiscal union.
But the EU cannot achieve its aims unless soft money comes with hard standards. Money from heaven can be both a blessing and a curse. If spent well, it can end political stalemates and trigger economic revivals. But if distributed indiscriminately, it encourages state capture and pork-barrel politics. The recovery funds should uphold the EU’s values and serve well-defined goals.
For its commendable ambition not to be subverted, the EU must be able to say no to member states, both when elected autocrats openly trample on European principles while using EU money to harden their grip on power, and if governments’ proposed spending programs fail the effectiveness test. Unfortunately, this looks unlikely to happen.