BIC Reacts to the EU's MFF and coronavirus recovery fund deal

Submitted by BIC on Thu, 07/23/2020 - 15:46

After four days of intense negotiations, EU leaders forged a deal on the 2021-2027 Multiannual Financial Framework (MFF) and a recovery package. The latter, to be composed of €390 billion in grants and €360 billion in loans, will be attached to the new €1.074 trillion seven-year budget, on which heads of state and government agreed unanimously. The total financial package was of €1.82 trillion, including  €98.4 bn to cover the EU’s external priorities. While many politicians and experts expressed optimism following the news that a deal was reached, many others voiced concern and disappointment.

 

Fernando Aguiar, BIC Strategic Adviser on Conflict and EU Politics, said:

 

“Reflecting the current geopolitical turbulence facing Europe, the EU finds itself surrounded by great power rivalry, a more vigorous China, an aggressive Russia, and a more distant US partner. These factors are putting into question the very concept of multilateralism, and the COVID 19 pandemic has only accelerated these trends.

 

Taking a look at the evolution of the budget allocated to the EU’s external actions, we see a substantive decrease from the European Commission’s proposal in 2018 and what has been agreed by the EU Council this Tuesday (21/07/2020). For example, Heading 5 on Security and Defence, the change volume is of - €11,138 bn, which represents a decrease of 18% of total cuts from the original proposal. As for Heading 6 on Neighbourhood and the World, cuts go up to 17%. One positive step, however, is that now the European Development Fund (EDF), will receive a specific budget allocation, strengthening the coherence of external spending. As the EDF included the African Peace Facility, this change adds new relevance to the proposed European Peace Facility (EPF), a EU off-budget fund to build peace and strengthen international security, which requires further scrutiny.

 

Overall, although historic in terms of budget, these particular figures show that the EU’s ambition of a bigger footprint in the world will be limited, and risk further uncertainty on how this aspiration will be implemented in operational terms. With such cuts, it is unclear how EU will match its geopolitical ambitions to deliver on operational deployability and capability development