Why the recovery fund won’t work

Crisis-hit countries, and Italy in particular, need money now — not later.

 
Mujtaba Rahman is the head of Eurasia Group’s Europe practice and the author of POLITICO‘s Beyond the Bubble column.

 
European leaders convening in Brussels next week have pinned their hopes on a €750 billion recovery fund to rescue the Continent from the coronavirus crisis.

It won’t be enough.

When it comes to the mission for which it was primarily designed — to help Rome deal with the economic shock of the coronavirus and alter the trajectory of Italian politics to better guarantee its long-term membership of the eurozone — the recovery fund is unlikely to succeed.

To be sure, the recovery fund represents a big step forward in the evolution of the EU. It will allow for significantly more borrowing at the EU level and substantial redistribution, via grants, to countries in Southern Europe disproportionately affected by COVID-19. Italy, for example, could receive 8.5 percent of its GDP in grants and long-term loans — an unprecedented sum in the EU’s 63-year history.

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Πηγή: politico.eu