The Brief – Ceci n’est pas une troïka

The Commission is going to great lengths to stress that the proposed recovery fund will not be a bailout programme. “This is not an adjustment program with a different name,” the Commissioner for Economy, Paolo Gentiloni, said in May. We are not back to troïka times.
The EU executive even avoids using the word “conditionality” to refer to the reforms that countries would have to put forward to unlock the €310 billion of non-refundable grants under the new Recovery and Resilience Facility, the bulk of the EU’s €750 billion stimulus against the coronavirus crisis.
The Commission has learnt from the mistakes made in the aftermath of the past crisis when the excess of austerity choked the European economy and triggered another downturn in 2012.
The economic situation and the ongoing negotiations on the recovery fund, however, could still lead to a recovery instrument that is not as benign as hard-hit countries had hoped.
In order to access the funds, countries will have to put forward reforms pursuing the digital and ‘green’ objectives, the EU’s mantra, and more: fiscal adjustments will also be part of the menu, an EU official has admitted, because sound public finances are an “important” part of the economic resilience.
The economic situation leaves little room for margin. The fallout of the pandemic is expected to push public debt levels to 196% of its GDP in Greece, 159% in Italy, 131% in Portugal, 116% in France and 115% in Spain.
Although the EU is now immersed in
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