EU Parliament votes financial assistance for countries affected by COVID-19

General view of the temporary hospital set up at a pavilion in Ifema convention and exhibition center in Madrid, Spain, late 21 March 2020. [EPA]

*Updates with ministers’ conference, quotes

Following an urgent procedure, the European Parliament on Thursday (26 March) almost unanimously backed two packages of financial support for countries affected by the coronavirus outbreak.

The instruments include an investment initiative worth €37 billion and widening the scope of the EU Solidarity Fund by up to €800 million so that EU countries can draw from it in case of a public health emergency like the COVID-19 outbreak.

The measures were adopted via urgent procedure two weeks after the European Commission put them forward and almost by unanimity, with 683 votes in favour, 1 against and 4 abstentions in the case of the investment tool and 671 votes in favour, 3 against and 14 abstentions for the fund.

The so-called ‘Coronavirus Response Investment Initiative’ will mobilise funds within the existing EU budget to promote investments in the sectors affected by the crisis in the short and long term. 

It will do so by redirecting unused resources from the European Structural and Investment Funds (ESIF) that support regional development in the poorest regions of the bloc.

Member states receive cash as pre-financing for cohesion policy projects which eventually has to be returned to the EU budget if it is not used. The Commission calculates that countries would have to return around €8 billion from 2019. 

The new regulation would allow using that money. Together with €29 billion in EU co-financing, this would mobilise a total of €37 billion worth of investment across the 28-member bloc. 

Younous Omarjee, a leftist MEP and chair of the Parliament’s regional development committee, is in charge of the file and welcomed the adoption of this “necessary and expected” measure.

These fonds, Omarjee told EURACTIV, “will be able to be mobilised tomorrow across Europe to help public health services, citizens, local communities and SMEs to cope with this violent crisis.”

The Parliament approved amending the EU Solidarity Fund regulation as well. The fund was initially set to assist countries affected by natural disasters but from now on, member states and countries in the EU accession process will be able to request support in case of public health crises like the coronavirus pandemic. 

Under the new regulation, the fund will cover assistance to the population in case of health crises as well as measures aimed at containing the spread of infectious diseases. Member states facing an outbreak will have access to the financial aid of up to €800 million in 2020. 

ECB unveils €750 billion stimulus against coronavirus

The European Central Bank unexpectedly announced just before midnight on Wednesday (18 March) that it would spend €750 billion in bond purchases to calm down sovereign debt markets, in the strongest signal in the euro area to date that it was ready to fight against the economic fallout of the coronavirus.

Countries to ask for flexibility

Following the vote, EU ministers responsible for Cohesion Policy held a video conference called by Croatian Minister of Regional Development and EU Funds Marko Pavić.

Member states agreed to appeal the Commission “to extend the possibility of using the majority of the remaining European Structural and Investment Funds in our countries for health care, entrepreneurship, labour markets and liquidity and to use these funding options with maximum flexibility and as quickly as possible,” minister Pavić said in a written statement.

“We are living one of the most serious crises in living memory: a crisis that threatens lives but also jobs and prosperity. Exceptional times call for exceptional measures,” Commissioner for Cohesion and Reforms Elisa Ferreira argued stressing the importance of the ‘Coronavirus Response Investment Initiative’.

“The motto of cohesion policy is “no European left behind”: today more than ever, this solidarity is essential,” she added.

The EU budget battle 

Cohesion funds are expected to be severely cut in the EU’s upcoming long-term budget for 2021-2027 – the so-called Multi-annual Financial Framework, which is still under negotiation.

But the coronavirus outbreak has changed everything, Omarjee said. “The situation today has very little in common with almost 2 years ago when the MFF 2021-2027 proposal was put forward,” said the chairman of the Parliament’s regional development committee.

“The multi-annual budget will have to be up to the reconstruction as if after a war,” the leftist MEP claimed. “Heads of State can no longer do with a small budget and big cuts.”

“We are living in historic moments that engage the future of the EU. The time for Europe to wake up is now or never!” he added.

The Parliament’s green light arrived as EU leaders on Thursday wrapped up a videoconference summit to move forward on the bloc’s response to the COVID-19 crisis, but clashed over the economic tools to support the most affected countries.

After the meeting, European Commission president Ursula Von der Leyen called for an ambitious budget. “This crisis shows how important, indeed crucial, is to have a budget that can deal with a crisis such as this one,” she declared.

By now, EU leaders would have been expected to be close to an agreement for the next long-term budget. But the coronavirus pandemic has paralysed the negotiation process, which European Council president Charles Michel said he was hoping to relaunch as soon as possible.

MEPs demand a new long-term budget in response to coronavirus 

Leading MEPs are urging the European Commission to update its proposal for the EU’s 2021-27 budget and factor in the response that will be needed to tackle the consequences of the coronavirus pandemic.

(Edited by Frédéric Simon)

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