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March 23, 2023

The EU recovery plan: East – West division and an opportunity to bridge social gaps

By Elena Petrescu and Yannis Karamitsios


A colossal European plan


NextGenerationEU is the EU recovery package to support member states overcome the consequences of the COVID-19 pandemic. It is worth €750 billion for the period of 2021-23. It will be coupled by the ordinary multiannual budget for the period 2021-27. The two schemes are expected to reach a sum of over €1,800 billion – a colossal programme without any precedent in European history.

At the heart of NextGenerationEU lies the Recovery and Resilience Facility (RRF), which will make more than €670 billion available to member states in grants and loans. Its purpose is to support reforms and investments that will better equip member states for a sustainable comeback.

The money raised for NextGenerationEU will be invested across three pillars: support to member states with investments and reforms; kick-starting the EU economy by triggering private investments; and addressing lessons of the crisis. Those pillars include programmes and targets like the resilience of national economies; top-up of current cohesion policy programmes; a just transition fund to help current workers in fossil fuel sectors; supporting farmers for new structural changes; a strategic investment facility; a new health and civil protection programme – just to name some. It will also allocate almost €100 billion for research in health, resilience and the green and digital transitions (Horizon Europe).


But did the member states get it right?


The plan is everywhere. Mass media talk daily about it. In countries like Italy, Greece or Romania, it is seen as the only substantial means to exit the crisis. However, in certain places expectations are high, or higher than they should be.

For example Romania. They faced some delays with the submission of their proposed plan to the European Commission. A principal reason for this postponement was the Commission’s reluctance to accept Romania’s emphasis on gas distribution networks. This would have resulted in hundreds of towns being connected to the national gas grid; only 40% of Romanians are connected to the network.

Another major bone of contention was modernisation of irrigation systems, which was not embraced by Brussels with open arms because of the amount of water they waste. Romania also asked for more than four billion Euros to build highways in the country; infrastructure the Commission considers ‘zero per cent green’.

Problems have been observed with other national plans. Poland, for example, is reluctant when it comes to aligning with the EU 2050 climate neutrality goal which was reflected in the draft plan submitted by their government. The Czech Republic’s plan was also far from ‘green’ standards expected by Brussels, insisting, to an extent, on natural gas. Slovakia’s plan has been criticised as based on outdated climate change targets that only aims at achieving a 47% cut in emissions by 2030. Hungary’s plan, foreseeing direct payment for health salaries from EU money should not be mentioned.

Indeed, the fact that Romania and other eastern countries from east EU submitted remnants of old concepts of development within such an ambitious plan was never a moment to celebrate. Of course if member states fail to use funds in an applied-to-real-needs way, their post-pandemic recovery becomes a pyrrhic victory.


East – West disparities


Besides structural issues, the plan has brought again ‘European affairs’ to public attention that we all know: existing development disparities between member states in western and northern states and those from central and eastern states (CEE).

Despite undeniable economic progress, CEE states have been crawling along in certain development fields, and especially in the social one. High disparities in the risk of poverty and social exclusion, minimum wages, social service expenditure and income disparity are part of this reality. European integration has made an incredible stand, but differences in averages of real GDP per capita between CEE and western EU still remains significant. According to Eurostat data, in 2020, the GDP in CEE member states was around three times lower than in western ones.

There are also significant gaps in values: in CEE countries, matters related to trust in institutions, fighting corruption, tolerance of minorities such as LGBT groups or gender equality, and even trust to Covid vaccines, are significantly lower embraced than in the West. Those indicators are as important as economic denominators when proposing to discuss development.


An opportunity to move forward


East – west disparities in the EU have deep historic roots and will not disappear within a few years. They have already emerged strongly during drafting of the new European plan. Nevertheless, a cautious implementation of the plan could be Europe’s magic wand, at least in terms of infrastructure, innovation and development.

Through its RRF component, NextGenerationEU can pave the way toward a green, digital, smart and sustainable European transition, this expectation being, of course, dependent on levels of motivation and capacity of each member state to conduct real investments and reforms. Hopefully, in the long run, this transition would mean less disparity and more cohesion.

Hopefully too, in this big investment and structural reform, social-oriented lenses should be used. Thereby, the Next Generation EU would be not only green and digitally connected, but also in terms of values and social prosperity.


About the authors:


Elena Petrescu is a Community Manager and Program Officer at Atlantic Forum, a grassroots think tank getting together young professionals and academics interested in international security policy, NATO and the EU, and Yannis Karamitsios is a co-founder of Alliance 4 Europe, a transnational European NGO based in Brussels.


Photo: www.gov.ro

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