The recent European Union summit demonstrated the desire of a number of influential EU members to enhance budgetary discipline and accountability for the funds used, which could negatively affect Moldova’s long-term financial interests
The economic situation in Moldova is developing in such a way that the search for foreign funding becomes almost the basic task of its current government. Under these conditions, the Prime Minister of the Republic of Moldova constantly voices the encouraging statements about international financial borrowings. Just yesterday, Moldova received 70 million euros from the Council of Europe Development Bank, designed in almost equal proportions to strengthen the health care system and support small and medium-sized enterprises. In July, much is said about the 200 million Russian loan, and financing from the European Union and the International Monetary Fund.
Previously, talks like that seemed to be a manifestation of the traditional Moldovan desire to grab international grants and loans, while shifting the responsibility for their return and maintenance on the next government, today Moldova really needs international donor resources. Given the raging pandemic, the constant purchase of expensive drugs, equipment and supplies, the paralyzed economy, and the reduction in remittances from abroad, the Republic of Moldova will not be able to cope with the COVID-19 consequences on its own. According to experts’ forecasts, most countries will feel the full depth of the economic recession in autumn and winter, and free money to restart the stagnating economy will be required exactly by that time.
This is well understood in the European Union, therefore France and Germany have come out in solidarity with an ambitious package of measures to stabilize the EU economy as a whole, with an emphasis to help the countries most affected by the COVID-19 pandemic. However, the Brussels summit of the heads of state and governments of the EU member states, despite Germany’s presiding role in the EU Council, was held in conflict and ambiguity.
What was slated as a two-day meeting could not weather the storm of negotiations, and the summit lasted four days. As you know, the summit sought to agree on a long-term EU budget in the amount of 1.82 trillion euros, and the functioning of an economic recovery fund in the amount of 750 billion euros.
The main stumbling block was how much of the $ 750 billion fund would be allocated in grants and how much in loans. The “frugal four” countries (Austria, Denmark, the Netherlands and Sweden with Finland’s support) expressed the opinion that no less than 350 billion euros should be allocated in the form of repayable loans. In turn, France and Germany, which support Spain and Italy, the main victims of COVID-19, pushed for 500 billion euros in grant funds.
Tempers were often frayed at the summit. Dutch Prime Minister Mark Rutte, who got the unofficial nickname “Monsieur No”, made French President Emmanuel Macron upset to the extent that he even threatened a walk-out. The president of the fifth republic unleashed his fury also on the Austrian Chancellor Sebastian Kurz, who risked answering the phone call, “You see? He doesn’t care. He does not listen to others, has a bad attitude”.
Hungarian Prime Minister Viktor Orban was even harsher, accusing Mark Rutte of personal hatred of him and Hungary in general, “If the deal is blocked, it isn’t because of me, but because of the Dutch guy.” To intensify the controversy, Orban accused the Dutch prime minister of using the same terminology as the communists: “The former communist regime used inaccurate legal language, exactly the same as is written in the proposal of the Dutchman. He used communist terms, and is not even aware of that.”
The dispute between the heads of government of Hungary and the Netherlands, meanwhile, was far from being futile and came up as a result of the Dutch proposal to use the so-called “rule of law criterion”. Mark Rutte publicly expressed doubts about the rule of law in relation to Hungary, although he did not specify the reasons for such a critical attitude. Based on the above criterion, a decision may be made to restrict access to grant resources from the Economic Recovery Fund which means that some countries may get the opportunity to “punish with the ruble” the negligent members of the union who violate common European values.
Needless to say, Moldova will have to curb its financial appetites, with such an interpretation of financing issues adopted at the official level with regard to the EU members. The rule of law is firstly, a rather subjective category, and secondly, in any case, has nothing to do with modern Moldova. It is unlikely that the EU bureaucracy will be more lenient towards Moldova than towards Hungary, which is a member state of the union. Anyway, no successful reforms in the current internal political situation in Moldova can be expected.
The degree of contradictions in the EU can be judged by the words of Luxembourg’s Foreign Minister Jean Asselborn voiced on Monday at a time when the overall framework of the deal was almost agreed upon. Despite the fact that Angela Merkel had already announced a compromise in which 390 billion euros will be allocated in grants, the Luxembourg diplomat harshly criticized what was happening at the summit, “I think if this attitude had dominated in 1989, for example, I am not sure that Germany would have been reunified so quickly and smoothly, I am not sure that we would have been able to unite Europe, have the European currency today or the Schengen area. All that required foresight, willingness to take risks and at the same time conviction, rather than today’s small-mindedness.” According to Asselborn, the EU appears to be “divided into four parts – north, south, east and west, and no one knows exactly what keeps it all together in the middle.” He called the actions of the “frugal four” representatives as those “undermining the idea of solidarity and the sense of belonging to the EU.”
As you can see, it’s not that easy to spend money of EU taxpayers even on supporting the EU countries, despite the fact that a 10-12% drop in GDP in Italy and Spain will negatively affect tens of millions of Europeans. Not to mention Moldova, which has never been efficient in spending the funds received, and even more so in the rule of law. Apparently, the Republic of Moldova will have to live with its own mind for a while, without expecting external generous support and, as always, funds will be not enough for ordinary citizens, not for politicians who have brought the country into such a state.
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