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Just as the EU is rolling out its rescue package to combat the economic fallout from the coronavirus pandemic, Russian President Vladimir Putin’s invasion of Ukraine means that Brussels is having to consider a host of additional support measures. financial aid.
The European Commission is looking for options to protect its economy from the impact of Western sanctions against Russia, including soaring energy prices and potential retaliatory measures from the European Union. Kremlin, five EU officials and diplomats told POLITICO.
The package, which could be approved as early as next week ahead of the EU leaders’ summit in Paris next Thursday and Friday, is still under discussion. However, initial negotiations suggest that elements of it may include repositioning of loans, new debt to raise money for loans in the event of a spike in energy prices, and guidelines for expedited approval of state grants.
“In the short term, there is a range of measures that we have worked with with the European Commission, in particular with [European Commission Executive Vice President] Margrethe Vestager, can be related to state aid or special loans for companies… They must prioritize targeting the most fragile companies, companies that use a lot of gas and companies subject to international competition. This is the framework that we are defining and that has been validated,” French Finance Minister Bruno Le Maire told reporters at a press conference on Wednesday, following an online meeting of finance ministers. EU itself.
EU countries have yet to be formally consulted, but some initial reactions from some diplomats have been very cool, with some describing the Commission as “going ahead of itself”.
In recent days, EU leaders have called on Brussels to come up with proposals of this kind: “If you have a situation of sanctions and counter-attack, that will have an impact,” said Belgian Prime Minister Alexander De Croo. told reporters on Tuesday. “Therefore, at the European level, we specifically call on the European Commission to develop a package of measures to limit the economic impact.”
Prime Minister Mario Draghi of Italy, one of the countries that will be hit hard if Putin turns off the gas faucet, told The senators on Tuesday said that “the fight will have consequences on energy prices, which we will face with new measures to support companies and families.
An element that the Commission is studying and which seems to have informal support from funding sources is a new element. especially interim framework for state aid, like the one adopted at the start of the COVID-19 pandemic. This will detail the conditions under which the capitals will be allowed to support their companies affected by the Ukraine crisis and ensure prompt approval from Brussels. Ongoing discussions focus on what is the scope, duration and trigger events for such a new framework.
Brussels may also invite EU countries that have not exhausted their right to borrow under the bloc’s Recovery and Recovery Facility, a joint debt coronavirus recovery package worth 723.8 billion euros, to request additional financing. No country except Italy has requested the full amount of the loan. Any new funding request for the facility will need to be accompanied by a spending plan subject to Commission and Board approval.
A third option is for the EU to issue new debt to raise money, which it then lends to countries at attractive interest rates, which can be used to counter a sharp rise in energy prices. European Union pact allows the bloc to provide financial support to members in “special circumstances beyond the control of the block” and “in particular if serious difficulties arise in the provision of certain products, in particular is in the energy sector.”
Officials stressed this would require signing from EU capitals, and some diplomats noted that raising new debt was not their preferred option. One EU diplomat said: “It is better to look at existing tools than to start fighting over new money.
Another EU diplomat was even more scathing: “The Commission has once again gone beyond itself. Of course, we all need to consider carefully the economic and financial consequences of the situation. But for some time to come, EU member states will still benefit largely from the recovery fund. Those additional billions of dollars will get them through the current situation – and without having to find make some extra money from the EU.”
The committee declined to comment on any potential upcoming measures.
Bjarke Smith-Meyer, Lili Bayer and Barbara Moens contributed reporting.
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https://www.politico.eu/article/eu-measures-shelter-economy-russia-sanctions-blowback/?utm_source=RSS_Feed&utm_medium=RSS&utm_campaign=RSS_Syndication EU seeks measures to protect economy from Russian sanctions - POLITICO