REVIEW - EU's Lofty Recovery Plans, Mammoth Budgets, Beset With Pitfalls

MOSCOW (UrduPoint News / Sputnik - 10th February, 2021) Leaders of the 27 EU member states pat themselves on the back last June for swiftly agreeing on a long-term budget and rescue package amid the COVID-19 pandemic's economic devastation, but the 1.8 trillion Euros ($2.18 trillion) behemoth may prove a more difficult beast to manage than imagined.

Economists tell Sputnik that efficiently investing such elephantine sums of money requires careful consideration and long-term planning, which is all but absent in the EU leadership's current state-of-emergency style budget management.

Around 750 billion euros of that sum was earmarked for the Next Generation EU, a recovery fund that envisions a transformation in the bloc's energy and digital infrastructure. The plan requires every member state to submit a detailed report of how they plan to go about achieving the ambitions to be greenlighted by the European Commission. But with Brussels beckoning the reports, less than half of the member states have been able to draft such roadmaps, let alone approve all the plans domestically, French economist Francois Lenglet said in one recent television appearance.

"Less than one in two EU member states sent their planned investments to Brussels, eight months after the launch of the plan, because gigantic projects have to be set up for the ecological transition, digital technology... there is the complexity of the decision-making circuits. The plans are first discussed by the Commission, which must give its approval," Lenglet said, speaking to TF1.

The economist went on to highlight that the current situation is the exact reverse of where the EU found itself at the heels of the 2008 financial crisis. Lenglet said how austerity and budget cuts were the agenda of the day back then, while ramped up expenditure and stimulus reign supreme today, and in both cases, Brussels is forcing EU capitals to make crucial decisions in hyperspeed.

In correspondence with Sputnik, Etienne de Catallay, a fund manager in Luxembourg, seconded that opinion but said that it was natural to pace themselves while deciding on large expenditures.

"Europe, after the 2008 crisis, caused the economy to relapse to budgetary austerity. Now the EU bets on rapid recovery through the massive injection of funds. The European states are largely stepping on the pedal of budgetary gases... it is logical that it takes time [to draw up investment plan]" de Callatay said.

He went on to say that European leadership has the wiggle room to play out their expenditures and update their plans in real-time.

"So-called stimulus plans are not short-term measures, but medium-term initiatives. It is normal that the effects will be spread over time, in 2022 and later. Everything must be spent by the end of 2024," de Callatay assured.

Belgian banking veteran Francis Panichelli, who is now a leading asset manager and insurance broker, told Sputnik that Next Generation EU plans may end up little less than a snapshot of what political ideologies preside among individual EU leadership, given that lack of a significant unifying pan-EU transition project.

"The choice of projects could be made according to the political ideologies of the moment and billions could be swallowed up for no result in subsidized dead-end technologies.

There are no great innovative projects which are mature and supported at the European level, except the dead-end of hydrogen. All this with taxpayer money for the benefit of multinationals with the best lobbies," Panichelli said to Sputnik.

He added that a rushed decision-making process may peril the EU's Green Deal policy initiative, due to the long-term nature of energy investments.

"Being in a hurry is not a recipe for success, especially when fundamental choices have to be made in sectors such as the energy sector, which is essential in the Green Deal approach," Panichelli posited.

Panichelli highlighted that the initiatives are not launched on a clean slate, but inherit the EU's positions in the energy and digital sectors from the pre-pandemic world.

Pranchelli pointed to the increasing standoff over the future of nuclear energy.

"The European Commission has not even taken sides in the deadly struggle between the supporters of nuclear energy - that practically emits no CO2 - and the arch-enemies.

The ECR just published a report, declaring that Europe cannot reach its goal of carbon-neutrality in 2050 without nuclear energy... but the Green parties continue to demand a complete stop to nuclear energy. The European Commission is paralyzed," Pranchelli said.

With regards to digitization, the EU Next Generation plan will have to contend with the precarious relationship between EU regulators and the US tech giants.

"Another point is to define what the 'digital revolution' is and what sort of investments in the billions could you do in the sector dominated by the GAFAM [Google, Apple, Facebook, Amazon, Microsoft], in open war with the EU?" Pranchelli asked.

The economist finished off by saying that these hefty funds will by and large fly over small and medium-sized businesses in the bloc and into the coffers of multinational giants.

"All the projects that will crop up in the tens of billions of euros, light years away from the small and medium enterprises and the sectors that suffer greatly from the pandemic," he stressed.

After drafting the size and makeup of the budgetary agreement last summer - including the seven-year 1.08 trillion euro budget - leaders did not manage to finally pass it at the highest level until December for political reasons. Poland and Hungary, in line to be the biggest beneficiaries of the handouts, took the agreement hostage with demands of being exempt from the EU's rule of law mechanism. Warsaw and Budapest successfully forced the hand of Brussels and delayed the implementation of the mechanism, meaning they were free to carry on diminishing LGBT, abortion and immigrant rights with impunity for the time being.

After Brussels caved and the budget agreement was inked, EU leaders put on smiling faces and tweeted felicitations, but the bad aftertaste remained, reminding everyone of the mammoth task of getting 27 culturally and linguistically distinct countries on the same page on generational paradigm shifts.