HASWhile most European countries are still recovering from the economic shock of the pandemic, the Russian invasion of Ukraine has accelerated the rise in fuel and food prices, especially in countries highly dependent on Russian energy products. European solidarity has a new role to play. Two options are possible.
A first option would be to rely on the program NextGenerationEU and transform it into a permanent budgetary capacity. The economic and social costs stemming from the pandemic have prompted the Member States and the institutions of the European Union (EU) to devote 800 billion euros over six years to the recovery and resilience of the economy of the Member States thanks to country-specific allocation of funds.
The pandemic has thus shown that it is possible to develop an integrated and coordinated EU response to a deep crisis, including unprecedented measures such as the issuance of European debt to finance a recovery plan with long-term objectives such as ecological transition.
The creation of a new temporary program
The fact remains that the progress of the program is only very gradual and that it is based on a mixture of grants and loans, the latter having been shunned so far by the Member States. At the end of 2021, more than a year after the start of the pandemic, only 100 billion euros had been mobilized. Therefore, the impact of the program remains unknown to date. It seems difficult to argue for an immediate move to a permanent mechanism.
The other option would be to create a new temporary program, like the program REPowerEUannounced in May by the European Commission, but with two major differences: the objective of the program would go beyond the energy issue and the program would be endowed with new funds, and not unclaimed loans from NextGenerationEU.
This new scheme, which could be dubbed ‘This Generation EU’, would be targeted at those currently living in the EU and facing new risks to their safety, purchasing power and ability to offer solidarity to new immigrants. Uncertain oil and gas supplies and rising energy prices call for accelerated substitution of energy inputs with renewables.
A contribution to European and social cohesion
To achieve the objective of net zero greenhouse gas emissions by 2050, it is therefore necessary to invest beyond the amounts to which NextGenerationEU contributes. Moreover, the rise in energy prices has unequal effects between the Member States. In some of them, the losses in purchasing power are more acute because the national budgetary room for maneuver is limited there.
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