France and Germany jointly unveiled their recovery plans yesterday. Italy and Spain did not join the ceremony but had agreed on the date with Berlin and Paris and presented them on their own. They were in a hurry.
In this article
Of hurry and forms
Let’s be crystal clear: last year we were very efficient in adopting the European recovery plan and in choosing to issue common debt. Since then, we have lost too much time. China has resumed its growth. The United States is booming. The EU must stay in the raceBruno Le Maire, Minister of Economy of France
Le Maire was referring to the outburst of centrifugal forces that was about to the point of derailing the initiative at first; it then pulled a battle with Hungary, Poland and the Czech Republic over the rule of law; and, when the initiative seemed to be back on track, it was dragged into a long delay by the blockade of the German Constitutional Court. The efficient European Union came closer to imploding than after Britain’s Brexit referendum.
And indeed, Germany and France have felt US’ breath in their necks as soon as Biden came to the White House. Biden not only left them out of the main European issue of the moment, the crisis in Ukraine, but with his economic revival plan, integrally linked to the Green New Deal, he threatened to lock European capitals out of major capital flows. Hence the sudden agility of Brussels in approving a European Climate Law, the proposals to increase the volume of funds and, as Le Maire stated in the quote above, to organize the presentation of their recovery plans together.
They didn’t manage to do very well in their haste either. The Spanish government for example didn’t even provide copies of the recovery plan to journalists, just briefings. When at yesterday’s press conference after the Council of Ministers they asked Minister Maroto for copies of the document, she confessed that they were not ready because of the complexity of the formats of the European forms. Translated, they did not have time to fill in the contents in the little boxes of the standard Brussels form. The priority was to comply with the date proposed by the Germans and the French.
Not much detail was really to be expected from the Spanish recovery plan beyond the broad outlines and commitments. The concrete measures and methods are kept secret excluding even the ministers themselves.
The common threads in the recovery plans
Now the next goal, agreed between the four countries and the Portuguese presidency in turn, is to release as soon as possible a large amount of funds from the recovery plans to avoid or reduce the lack of money to pay for basic social cohesion costs in the first place and secondly to set projects in place in time to compete for the capital that the Green Deal is putting into circulation in the U.S.
That is why the funds earmarked for the Green Deal – and almost 100% of which are held by electricity, energy and construction companies – are the biggest bite of the recovery plan in all countries. 70 billion in Italy alone, not counting those allocated to energy infrastructures in the items specifically aimed at the south of the country, which total another 82 billion. In Spain, they represent 39% of the total budget. In Germany, 40%. In France, it is 50%.
But the most interesting thing is the logic of the reforms barely outlined as early as yesterday. To the surprise of locals and outsiders alike, not only Italy but also Germany announced the start of some deregulation of financial investments with a certain degree of systemic risks. And they all pointed towards fiscal consolidation in one way or another. But they gave hardly any new clues about pension reforms in France and Spain or about labor market reforms.
Only in France did Le Maire point to a reform of unemployment benefits guided by the objective of increasing incentives for return to employment. We already know where such incentives are going: accept more precariousness and lower wages or lose an ever-shortening benefit.
The information economy
Today only one of the major Spanish newspapers had the recovery plans on the front page… the German and French ones, that is. The Spanish didn’t even appear. Nor did it appear yesterday on state television news, although it did feature the Italian news.
On the reforms concerning working conditions in the recovery plans… we don’t even talk about them. About where the hundreds of thousands of good jobs promised on account of the Green Deal over and over again are going to come from, either. At the moment it seems that the more profits they announce, the more the energy companies, which are the main recipients of the massive subsidies of the recovery plans, reduce their workforce. At the moment we only know that construction is responsible for 25% of the new jobs and the rest, not a hint.
What is clear is that when the announcement of recovery plans is embellished with jobs that cannot even be assigned to a particular sector, something is wrong. And when reforms are communicated sparingly and with catch-all phrases, under generalized secrecy, there is more than bureaucratic incompetence. There is a strategy.