The Post-Covid19 Challenges to the European Union.

Key points:

Minister Korčokshared his views on the post-COVID-19 challenges to the European Union as seen from the perspective of Slovakia, including in particular the EU recovery package, MFF negotiations, and the need for the EU to play a bigger role on the world stage. The discussion was moderated by Alexander Stubb, Director of the School of Transnational Governance European University Institute (EUI). 

We are now in the midst of the great, multidimensional crisis that has an enormous impact on our lives, security or our institutions. However, the European Union has gone through many hard tests, that in the end made the European Union stronger – Robert Vass 

  • Europe’s reaction to the COVID19 pandemic was two-phased. Initially, it took Europe some time to assess the scale of the crisis and recognize that working within a conventional and familiar legal framework wouldn’t be enough. Europe had to also act politically.  
  • In the second phase, this realization was converted into action in the form of European monetary instruments, the coordination of green corridors, the creation of emergency funds, and the adjustment of competition policy and state aid rules. 
  • The EU institutions and Member States lost in the initial battle of the COVID19 narrativesboth nationally and globally. But this perception is now turning around following the continent’s increasingly vigilant response. 
  • In assessing the EU response, there is a need to distinguish what the EU has donewhere it hasn’t taken action, what it should be doing, and what lessons can be drawn from these decisions. 
  • The speed of the EU reaction should be evaluated in the context of prior experiencesThis means judging a four week COVID19 pandemic response against the 4 years in the aftermath of the financial crisis.  
  • The COVID19 crisis was the moment when we truly understood the value of neighborhood and good cross-border relations. COVID19 made it clear to everyone that reaching out across borders is not just a choice. It is a necessity. Slovakia has worked closely with the Czech Republic, Hungary, Austria, Poland, and other countries. 

“Managing the immediate health crisis was the easier part. Managing the economic and social consequences will be much more difficult. The next EU budget and the recovery plan is the issue we must focus on.” – Ivan Korčok 

“The proposal for the recovery plan and budget, Next Generation EU, is unthinkable and unprecedented; can potentially boost political integration; but also risky” – Ivan Korčok 

  1. The recovery package is unthinkable and unprecedented.  
  • Before the crisis, Member States could not overcome what, from today’s perspective, now seem like rather minor differences in positions on the size of the next long-term budget. We also stumbled over disputes along traditional lines – net contributors v net beneficiaries, cohesion funds, agriculture policy, the extent and costs of the green transition. 
  • COVID19 provided an impetus for us to respond boldly. The proposal on the table is much bigger in size and has a structure based on a very different philosophy. We learned over the past several decades that crises leave the EU no choice but to agree on something previously considered unthinkable. 

2. It has the potential to boost political integration. 

  • Structural reforms have often been postponed in the past due to perceived tight budgets. Now we have a proposal that will result in more funding being available for structural reforms. But it will also spur political integration as the incentive for reforms is derived from joint borrowing and joint effort.   

3. But it is also a risky undertaking. 

  • Securing the ratification of all national parliaments has never been easy. Getting all 27 to ratify the next EU budget will be even harder. While resource allocation is discussed extensively, there is not enough discussion on how this funding, which we or our children will have to pay back, will be generated. The countries will either have to send larger cheques to Brussels or the EU will need to start generating its own new revenue. 

Slovakia will be constructive in the discussion about the Next Generation EU. We will have an open domestic debate. But we know this is an opportunity to modernize and green our economy and support digitalization– Ivan Korčok 

Slovakia is ready to look at the budget from a European perspective. It is not only about the size of the Slovak envelope. As a very open country, we will benefit from the growth of other economies as it will convert into the growth of ours” – Ivan Korčok 

“The most successfully integrated entity in the world does need a bigger budget” – Alexander Stubb 

  • The paradigm of providing countries with incentives to implement structural reforms is right. But the enormous time pressure to quickly design and enact structural reforms and prudently spend allocated resources constitutes a considerable risk. The fast tracking of the process of setting up national plans and drawing in funding could, moreover, lead to a moral hazardUnless we get it right and underpin structural reforms with legislative framework adopted in our countries, there is consequently a risk that we indebt future generations but there is not much change on the ground. 

At the next European Council (19 June 2020) the EU Recovery plan will be discussed. It is hard to imagine that an agreement on details can be reached by the end of the week. However, the Council meeting can bring an important agreement on the overall philosophy”. – Ivan Korčok 

No one will be able to make it on their own.” – Ivan Korčok 

A deal of such importance and detail is challenging to broker over a video conference format. But the upcoming video meeting can maintain positive momentum – even without reaching an agreement on the precise details, we still can come out with an agreement on philosophy. This can, therefore, be an opening for further in-person negotiations to take place later in July. 

  • It is unlikely that the final output will be the proposal we now have on the table. Difficult unanswered questions need to be discussed, including how to pay back the money and whether and what new own resources will be generated. 
  • Slovakia will be constructive part of the processThe size of the “Slovak envelope” will not be the only measure. We know that Slovak economy needs economically prosperous partners in Europe. A slightly bigger envelope for others will also boost Slovak fortunes.  

The EU-UK negotiations are still on, time is not over yet, so let’s use the remaining time effectively to get a good deal – Ivan Korčok 

  • The worst scenario would be no deal outcomeIf the UK refuses to extend the period, then the remaining time has to be used efficiently.  

“Europe’s voice on global stage won’t be heard, unless it acts effectively in its neighbourhood” – Ivan Korčok 

  • The European neighbourhood countries cannot be left on their own.  
  • The Slovak position holds that European credibility in the world depends on offering the prospect of European integration to Western Balkan and Eastern countries. 
  • The enlargement process has to continue. Albania and Northern Macedonia are reopening their accession talks. The dialogue with our neighbours cannot become a victim of the crisis. 
  • Slovakia will always support Ukraine’s territorial integrity and sovereigntyits transformation and its freedom to pursue closer relations with the European Union.   

Watch the video with the full recording of the webinar below: 

This online event was held under the framework of GLOBSEC’s campaign #Hub4Europe #PrimeTime.