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European coordinated response to counter the economic impact of the Coronavirus

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COVID-19 is a severe public health emergency for our citizens, societies and economies with infections in all Member States. It is also a major economic shock to the EU. The Commission therefore presents today an immediate response to mitigate the socio-economic impact of  the COVID-19 outbreak, centred on a European coordinated response.

The Commission will use all the instruments at its disposal to mitigate the consequences of the pandemic, in particular:

–          To ensure the necessary supplies to our health systems by preserving the integrity of the Single Market and of production and distribution of value chains;

–          To support people so that income and jobs are not affected disproportionally and to avoid permanent effect of this crisis;

–          To support firms and ensure that the liquidity of our financial sector can continue to support the economy

–          And to allow Member States to act decisively in a coordinated way, through using the full flexibility of our State Aid and Stability and Growth Pact Frameworks.

President of the European Commission, Ursula von der Leyen, said: “The Coronavirus pandemic is testing us all. This is not only an unprecedented challenge for our healthcare systems, but also a major shock for our economies. The important economic package announced today deal with the situation of today. We stand ready to do more as the situation evolves. We will do whatever is necessary to support the Europeans and the European economy.”

State aid Framework Flexibility

The main fiscal response to the Coronavirus will come from Member States’ national budgets. EU State aid rules enable Member States to take swift and effective action to support citizens and companies, in particular SMEs, facing economic difficulties due to the COVID-19 outbreak.

Member States can design ample support measures in line with existing EU rules. First, they can decide to take measures, such as wage subsidies, suspension of payments of corporate and value added taxes or social contributions. In addition, Member States can grant financial support directly to consumers, for example for cancelled services or tickets that are not reimbursed by the operators concerned. Also, EU State aid rules enable Member States to help companies cope with liquidity shortages and needing urgent rescue aid. Article 107(2)(b) TFEU enables Member States to compensate companies for the damage directly caused by exceptional occurrences, including measures in sectors such as aviation and tourism.

Currently, the impact of the COVID-19 outbreak in Italy is of a nature and scale that allows the use of Article 107(3)(b) TFEU. This enables the Commission to approve additional national support measures to remedy a serious disturbance to the economy of a Member State.

The Commission’s assessment for the use of Article 107(3)b for other Member States will take a similar approach. The Commission is preparing a special legal framework under Article 107(3)(b) TFEU to adopt in case of need.

The Commission stands ready to work with all Member States to ensure that possible national support measures to tackle the outbreak of the COVID-19 virus can be put in place in a timely manner.

European Fiscal Framework Flexibility

The Commission will propose to the Council to apply the full flexibility provided for in the EU fiscal framework so that they can implement the measures needed to contain the coronavirus outbreak and mitigate its negative socio-economic effects.

First, the Commission considers that the COVID-19 pandemic qualifies as an “unusual events outside the control of government”. This allows accommodating exceptional spending to contain the COVID-19 outbreak such as health care expenditure and targeted relief measures for firms and workers.

Second, the Commission will recommend adjusting the fiscal efforts required from Member States in case of negative growth or large drops in activity.

Finally, the Commission stands ready to propose to the Council to activate the general escape clause to accommodate a more general fiscal policy support. This clause would – in cooperation with the Council – suspend the fiscal adjustment recommended by the Council in case of a severe economic downturn in the euro area or the EU as a whole.

Ensuring solidarity in the Single Market

Only with solidarity and Europe-wide coordinated solution, we will be able to effectively manage this public health emergency. Solidarity is key in this crisis, in particular to ensure that essential goods, necessary to mitigate the health risks of the outbreak, can reach all those in need. It is essential to act together to secure production, stocking, availability and rational use of medical protective equipment and medicines in the EU, openly and transparently, rather than taking unilateral measures that restrict the free movement of essential healthcare goods.

The Commission is therefore taking all necessary steps to that end including by providing guidance for Member States on how to put in place adequate control mechanisms to ensure security of supply, and by launching an accelerated joint procurement procedure for these goods and issuing a recommendation on non CE-marked protective equipment.

The COVID-19 outbreak is having a major impact on our transport systems, given the close interlink of European supply chains, supported by an extensive network of freight services on land, at sea, and airborne. The Commission is working with Member States to ensure the flow of essential goods across land borders. The international and European aviation industry has been particularly hit. As announced by President von der Leyen on 10 March, to help ease the economic and ecological impact of the outbreak, the Commission is proposing today targeted legislation to temporarily alleviate airlines from the “use-it-or-lose-it” rule – whereby air carriers must use at least 80% of their airports slots within a given period in order to keep them within the corresponding period of the next year.

Finally, the Commission is liaising with Member States, international authorities and key EU professional associations to monitor the impact of the crisis on the tourism sector and coordinate support measures.

Mobilising the EU budget

To bring immediate relief to hard-hit SMEs, the EU budget will deploy its existing instruments to support these companies with liquidity, complementing measures taken at national level. In the coming weeks, EUR1 billion will be redirected from the EU budget as a guarantee to the European Investment Fund to incentivise banks to provide liquidity to SMEs and midcaps. This will help at least 100,000 European SMEs and small mid-caps with about EUR 8 billion of financing. We will also provide credit holidays to the existing debtors that are negatively affected.

Alleviating the impact on employment

We need to protect workers from unemployment and loss of income to avoid permanent effect. The Commission stands ready to support Member States in this, promoting, in particular short-time work schemes, upskilling and reskilling programmes that have proven effective in the past.

The Commission will furthermore accelerate the preparation of the legislative proposal for a European Unemployment Reinsurance Scheme aiming at supporting Member State policies that preserve jobs and skills.

Moreover, the Coronavirus Response Investment Initiative will facilitate the deployment of the European Social Fund – a fund geared towards supporting workers and healthcare.

The European Globalisation Adjustment Fund could also be mobilised to support dismissed workers and those self-employed under the conditions of the current and future Regulation. Up to EUR 179 million is available in 2020.

Coronavirus Response Investment Initiative

Under this new initiative, the Commission proposes to direct EUR 37 billion under Cohesion policy to the fight against the Coronavirus crisis. To this effect, the Commission proposes to relinquish this year its obligation to request Member States to refund unspent pre-financing for the structural funds. This amounts to about EUR 8 billion from the EU budget, which Member States will be able to use to supplement EUR 29 billion of structural funding across the EU. This will effectively increase the amount of investment in 2020 and help to front-load the use of the as yet unallocated EUR 28 billion of cohesion policy funding within the 2014-2020 cohesion policy programmes. The Commission calls upon the European Parliament and the Council to swiftly approve this proposal, so that it can be adopted within the next two weeks.

In addition, the Commission is proposing to extend the scope of the EU Solidarity Fund by also including a public health crisis within its scope, in view of mobilising it if needed for the hardest hit Member States. Up to EUR 800 million is available in 2020. 

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EU Politics

EU boosts humanitarian aid budget for 2021 as needs rise

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As global humanitarian needs worsen further due to the consequences of the coronavirus pandemic and the effects of climate change, the European Commission has adopted its initial annual humanitarian budget of €1.4 billion for 2021. This represents an increase of more than 60% compared with the initial humanitarian budget of €900 million adopted last year.

Janez Lenarčič, Commissioner for Crisis Management said: “Humanitarian needs are growing globally and we need a budget to match. Our increased budget will allow the EU to continue to play a leading global role in responding to emerging and existing crises. Ultimately, humanitarian aid is about saving lives. Yet the gap between the financial resources provided by donors and the rapidly increasing humanitarian needs in 2021 is growing. To leave no one behind we therefore need more international partners to step up to fill this gap. We should not forget that only a global response will solve global issues, such as the fight against the coronavirus pandemic, which affects everyone.

EU humanitarian in 2021 will be allocated as follows:

  • €505 million will be allocated to Africa to support people affected by the long-term Lake Chad Basin crisis, impacting Nigeria, Niger, Cameroon, and Chad; those suffering from food and nutrition crisis, worsened by security incidents and community conflicts, in the Sahel (Burkina Faso, Mali, Mauritania, and Niger); and those displaced by armed conflicts in South Sudan, Central African Republic and Horn Of Africa (Somalia and Ethiopia).
  • €385 million of EU humanitarian funding will be allocated to the needs in the Middle East and Turkey to help those affected by the Syria regional crisis, as well as the extremely severe situation in Yemen.
  • €180 million in humanitarian assistance will continue to help the most vulnerable populations in Asia and Latin America. In Latin America, this includes those affected by the crises in Venezuela and Colombia. The European Union will also continue to provide help in Asian countries such as Afghanistan, where the conflict has been qualified as one of the deadliest conflicts worldwide, and Bangladesh, which is currently hosting almost one million Rohingya refugees from Myanmar. The EU will also allocate €28 million to fund projects addressing crises in Ukraine, Western Balkans and the Caucasus.
  • The rest of the funding, €302 million, will be used for EU humanitarian air services and for unforeseen humanitarian crises or sudden peaks in existing crises.

Since climate change is increasing communities’ vulnerability to humanitarian crises, the funding will also help vulnerable populations in disaster-prone countries to prepare better for various natural hazards, such as floods, forest fires, earthquakes, and cyclones.

Background

The European Union has been providing humanitarian aid since 1992 in over 110 countries, reaching millions of people across the globe each year. EU assistance is delivered through humanitarian partner organisations, including UN agencies, non-governmental organisations, and the Red Cross family, who have signed partnership agreements with the European Union. The EU closely tracks the use of EU funds via its global network of humanitarian experts and has firm rules in place to ensure funding is well spent.

In order to address these complex challenges, the Commission intends to publish in the first quarter of the year a renewed strategic document on EU humanitarian action, proposing ways how the EU, together with its partners and other donors, can step up and show leadership in times when the need for humanitarian aid is greater than ever.

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Commission sets out key actions for a united front to beat COVID-19

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Two days ahead of the meeting of European leaders on a coordinated response to the COVID-19 crisis, the Commission set out a number of actions needed to step up the fight against the pandemic. In a Communication adopted today, it calls on Member States to accelerate the roll-out of vaccination across the EU: by March 2021, at least 80% of people over the age of 80, and 80% of health and social care professionals in every Member State should be vaccinated. And by summer 2021, Member States should have vaccinated a minimum of 70% of the adult population.

The Commission also calls on Member States to continue to apply physical distancing, limit social contacts, fight disinformation, coordinate travel restrictions, ramp up testing, and increase contact tracing and genome sequencing to face up to the risk from new variants of the virus. As recent weeks have seen an upward trend in case numbers, more needs to be done to support healthcare systems and to address “COVID-fatigue” in the coming months, from accelerating vaccination across the board, helping our partners in the Western Balkans, the Southern and Eastern neighbourhood and in Africa.

Today’s Communication sets out key actions for Member States, the Commission, the European Centre for Disease Prevention and Control (ECDC) and the European Medicines Agency (EMA) which will help reduce risks and keep the virus under control:

Speeding up the roll-out of vaccination across the EU

By March 2021, at least 80% of people over the age of 80, and 80% of health and social care professionals in every Member State, should be vaccinated.

By summer 2021, Member States should have vaccinated 70% of the entire adult population.

The Commission, Member States and the EMA will work with companies to use the EU’s potential for increased vaccine manufacturing capacity to the fullest.

The Commission is working with Member States on vaccination certificates, in full compliance with EU data protection law, which can support the continuity of care. A common approach is to be agreed by the end of January 2021 to allow Member States’ certificates to be rapidly useable in health systems across the EU and beyond.

Testing and genome sequencing

Member States should update their testing strategies to account for new variants and expand the use of rapid antigen tests.

Member States should urgently increase genome sequencing to at least 5% and preferably 10% of positive test results. At present, many Member States are testing under 1% of samples, which is not enough to identify the progression of the variants or detect any new ones.

Preserving the Single Market and free movement while stepping up mitigation measures

Measures should be applied to further reduce the risk of transmission linked to the means of travel, such as hygiene and distancing measures in vehicles and terminuses.

All non-essential travel should be strongly discouraged until the epidemiological situation has considerably improved.

Proportionate travel restrictions, including testing of travellers, should be maintained for those travelling from areas with a higher incidence of variants of concern.

Ensuring European leadership and international solidarity

To ensure early access to vaccines, the Commission is to set up a Team Europe mechanism to structure the provision of vaccines shared by Member States with partner countries. This should allow for sharing with partner countries access to some of the 2.3 billion doses secured through the EU’s Vaccines Strategy, paying special attention to the Western Balkans, our Eastern and Southern neighbourhood and Africa.

The European Commission and Member States should continue supporting COVAX, including through early access to vaccines. Team Europe has already mobilised €853 million in support of COVAX, making the EU one of COVAX’s biggest donors.

Members of the College said:

President of the European Commission, Ursula von der Leyen, said: “Vaccination is essential to get out of this crisis. We have already secured enough vaccines for the entire population of the European Union. Now we need to accelerate the delivery and speed up vaccination. Our aim is to have 70% of our adult population vaccinated by summer. That could be a turning point in our fight against this virus. However, we will only end this pandemic when everyone in the world has access to vaccines. We will step up our efforts to help secure vaccines for our neighbours and partners worldwide.”

Vice-President Margaritis Schinas, responsible for Promoting our European Way of Life, said: “The emergence of new variants of the virus and substantial rises in cases leave us no room for complacency. Now more than ever must come a renewed determination for Europe to act together with unity, coordination and vigilance. Our proposals today aim to protect more lives and livelihoods later and relieve the burden on already stretched health care systems and workers. This is how the EU will come out of the crisis. The end of the pandemic is in sight though not yet in reach.”

Stella Kyriakides, Commissioner for Health and Food Safety, said: “Working together with unity, solidary and determination, we can soon start to see the beginning of the end of the pandemic. Now in particular, we need swift and coordinated action against the new variants of the virus. Vaccinations will still take time until they reach all Europeans and until then we must take immediate, coordinated and proactive steps together. Vaccinations must accelerate across the EU and testing and sequencing must be increased – this is show we can ensure that we leave this crisis behind us as soon as possible.”

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Coronavirus response: EU support for regions to work together in innovative pilot projects

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The Commission has announced the winners of a new EU-funded initiative for interregional partnerships in four areas: coronavirus-related innovative solutions, circular economy in health, sustainable and digital tourism, and hydrogen technologies in carbon–intensive regions. The aim of this new pilot action, which builds on the successful experience of a similar action on “interregional innovation projects” launched at the end of 2017, is to mobilise regional and national innovation actors to address the impact of coronavirus. This initiative also helps the recovery using the new Commission programmes through scaling up projects in new priority areas, such as health, tourism or hydrogen.

Commissioner for Cohesion and Reforms, Elisa Ferreira, said: “Interregional partnerships are proof that when we cooperate beyond borders, we are stronger as we come up with smart and useful solutions for all. This new pilot initiative supporting interregional innovative partnerships is especially important in the current coronavirus context, showing how much cohesion policy is committed to contribute to Europe’s prompt response and recovery.” 

Following a Commission’s call for expression of interest launched in July 2020, four interregional partnerships were selected, with one or several coordinating regions in the lead:

  • País Vasco (ES), together with three regions, will focus on the support to an emerging industry sector for prediction and prevention of the coronavirus pandemic;
  • In the field of Circular Economy in Health, the RegioTex partnership on textile innovation involves 16 regions led by North Portugal (PT);
  • In the field of Sustainable and Digital Tourism, the partnership coordinated by the Time Machine Organisation, an international cooperation network in technology, science and cultural heritage, involves five regions and Cyprus, led by Thüringen (DE); 
  • In order to enable the development of innovative solutions based on Hydrogen technologies in carbon–intensive regions with a broad geographical coverage, two partnerships will merge: the European Hydrogen Valleys partnership gathering 12 regions led by Aragon (ES), Auvergne Rhône Alpes (FR), Normandie (FR) and Northern Netherlands (NL), and the partnership led by Košice Region (SK) with four other regions.

These partnerships will benefit from the Commission experts’ support, providing, among others, advice on how to best combine EU funds to finance projects. In addition to this hands-on support from the Commission, each partnership can benefit from external advisory service of up to €100,000 for scale-up and commercialisation activities. The money comes from the European Regional Development Fund (ERDF).

Next steps

The work with the partnerships will start in this month and will run for one year.This pilot further stimulates interregional cooperation, with the possibility for the partnerships to apply for support under the new programmes and the “Interregional Innovation Investment” instrument from 2021 onwards.

Background

In recent years, the Commission has called on national and regional authorities to develop smart specialisation strategies aiming at more effective innovation policies and enhanced interregional cooperation in value chains across borders. To date, more than 180 regional smart specialisation strategies have been adopted. Their implementation is supported by €40 billion of EU Cohesion policy funds.

As part of a set of actions presented in 2017 by the Commission to take smart specialisation a step further, a pilot action on “Interregional innovation projects” sought to test new ways to encourage regions and cities to develop new value chains and scale up their good ideas in the EU single market. This pilot action, which involved nine partnerships in high-tech priority sectors, was completed in 2019 and showed significant potential to accelerate the investment readiness of interregional investment projects.

The lessons learned will be integrated in the new “Interregional Innovation Investment” instrument proposed in the framework of the post 2020 Cohesion Policy package.

The new pilot action has similar goals. Moreover, in the context of the crisis, it aims at finding solutions to the coronavirus challenges and accelerating the recovery through the commercialisation and scale-up of innovation investment. 

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