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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

Conditions worsen for stranded migrants along Belarus-EU border

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At least eight people have died along the border between Belarus and the European Union, where multiple groups of asylum-seekers, refugees and migrants have been stranded for weeks in increasingly dire conditions. 

The UN Refugee Agency, UNHCRappealed for urgent action on Friday, to save lives and prevent further suffering at the border with Latvia, Lithuania, and Poland. The latest casualty was reported within the past few days. 

UNHCR warned that the situation will further and rapidly deteriorate as winter approaches, putting more lives in danger. 

For the Agency’s Regional Director for Europe, Pascale Moreau, “when fundamental human rights are not protected, lives are at stake.” 

“It is unacceptable that people have died, and the lives of others are precariously hanging in the balance. They are held hostage by a political stalemate which needs to be solved now,” he said. 

According to media reports, the EU regards the increase in asylum seekers at the border, a direct result of Belarus, in effect, weaponizing migrants, in retaliation for sanctions placed on the Government over the suppression of the protest movement following last year’s disputed re-election of President Lukashenko.  

International group 

Among those stranded are 32 Afghan women, men and children. They have been left in limbo between Poland and Belarus since mid-August, unable to access asylum and any form of assistance. They do not have proper shelter and no secure source of food or water. 

A group of 16 Afghans tried to cross into Poland this week, but they were apprehended and not allowed to apply for asylum. They were also denied access to legal assistance. Within a few hours, they were pushed back across the border to Belarus. 

So far, UNHCR has not been granted access to meet with the group from the Polish side, despite repeated requests, and only met them a few times from the Belarusian side to deliver life-saving aid. 

International law 

The Agency has been advocating for the group to be granted asylum, since the Afghans have expressed their wish to settle either in Belarus or in Poland. 

The request has been ignored by both sides. For UNHCR, that is “a clear violation of international refugee law and international human rights law.” 

“We urge Belarus and Poland, as signatories to the 1951 Refugee Convention, to abide by their international legal obligations and provide access to asylum for those seeking it at their borders.  

“Pushbacks, that deny access to territory and asylum, violate human rights in breach of international law”, said Mr. Moreau. 

UNHCR urges the authorities to determine and address humanitarian and international protection needs, and find viable solutions. The agency also stands ready to support refugees, together with other relevant stakeholders. 

“People must be able to exercise their rights where they are, be it in Belarus or in Poland or other EU States where they may be located. This must include the possibility to seek asylum, access to legal aid, information and appropriate accommodation”, Mr. Moreau concluded. 

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EU Politics

Focus on the recovery from the pandemic at the 19th EU Regions Week

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The annual European Week of Regions and Cities has shown how the EU and national and regional governments can support European citizens and their local communities with public policies aimed at investing in a fairer, greener and more digital future for recovery. Under the theme ‘Together for Recovery’, more than 300 sessions, including debates with high-profile officials, regional and local representatives, an inspiring Citizens’ Dialogue, various workshops as well as an Award for outstanding young journalists, celebrated the EU values of cohesion and solidarity.

Taking place in a hybrid format, with sessions both physical and virtual, the 19th EU Regions Week had one main mission: highlighting the role of EU investments in the recovery from the pandemic and in facing common challenges. The event kicked off with a press conference with Apostolos Tzitzikostas, President of the European Committee of the Regions (CoR) and Elisa Ferreira, Commissioner for Cohesion and Reforms, who underlined that “Cohesion Policy was one of the first responders in the emergency phase of the COVID-19 pandemic, driven by the core value of EU solidarity”.

The second annual local and regional barometer was presented by Apostolos Tzitzikostas, followed by a debate with members of the European Committee of the Regions. The report confirmed that the pandemic related measures put at risk regional and local finances, resulting in a 180 billion budget cut for local and regional authorities across Europe. At the same time, 1 in 3 local and regional politicians want regions and cities to become more influential in EU policy-making on health issues.

Unless we measure the state of our regions and cities, we cannot understand the state of our Union” said Apostolos Tzitzikostas, President of the European Committee of the Regions. “Only by taking the pulse of our communities, we can decide how effective the EU has been on the ground, and what the EU needs to do to help its people”.

Further taking stock of the EU cohesion policy response to the coronavirus pandemic as well as informing the general public, various workshops touched upon life before and after the pandemic, including explanations regarding the role of regions and cities for a Green Transition, the Cohesion Policy 2021-2027 and NextGenerationEU, as well as the CRII, CRII+, React-EU support packages for regional and local healthcare services and equipment.

Young journalists were also invited to take part in the EU Regions Week 2021, getting the opportunity to debate with Elisa Ferreira at the Citizens’ Dialogue. In the Youth4Regions programme for aspiring journalists, Irene Barahona Fernandez from Spain and Jack Ryan from Ireland won the 2021 Megalizzi-Niedzielski prize for aspiring journalists.

About the event

The European Week of Regions and Cities (#EURegionsWeek) is the largest EU-wide event on regional development. It is co-organised by the European Commission and the European Committee of the Regions.

In total, more than 12 000 participants and 900 speakers joined the 4-day event either physically or online, showing engagement in all corners of EU society – from our vibrant youth to our high-profile officials, local and regional representatives, academic experts and professional specialists, displaying a common readiness to tackle what the future holds, together.

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EU Politics

EU and Qatar sign landmark aviation agreement

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The European Union and the State of Qatar today signed a comprehensive air transport agreement, upgrading rules and standards for flights between Qatar and the EU. The agreement sets a new global benchmark by committing both sides to fair competition, and by including social and environmental protection. The signing means new opportunities for consumers, airlines and airports in Qatar and the EU.

Qatar is an increasingly important aviation partner for the EU. It was the 15th largest extra-EU market in 2019 with 6.3 million passengers travelling between the EU and Qatar. Ensuring open and fair competition for air services between both is therefore crucial, also for routes between the EU and Asia.

Adina Vălean, Commissioner for mobility and transport, said: “This agreement, the first one between the EU and the Gulf region, is a global benchmark for forward-looking aviation agreements. It is testimony to our shared commitment to economically, socially and environmentally sustainable aviation, based on a modern framework covering fair competition and closer cooperation on social and environmental matters. This agreement will bring new opportunities, more choice and higher standards for passengers, industry and aviation workers.”

Today’s agreement creates a level playing field that is expected to result in new air transport opportunities and economic benefits for both sides:

  • All EU airlines will be able to operate direct flights from any airport in the EU to Qatar and vice versa for Qatari airlines.
  • EU airports in Germany, France, Italy, Belgium and the Netherlands will be subject to a gradual build-up of capacity until 2024. For more details on this, see the Q&A.
  • Strong provisions on open and fair competition will guarantee a level playing field.
  • The parties recognised the importance of social matters, agreed to cooperate on these and to improve their respective social and labour laws and policies as per their international commitments.

The agreement will facilitate people-to-people contacts and expand commercial opportunities and trade. Going beyond traffic rights, the EU-Qatar agreement will provide a single set of rules, high standards and a platform for future cooperation on a wide range of aviation issues.

Background

Qatar is a close aviation partner for the European Union; more than 6 million passengers travelled between the EU and Qatar per year under the existing 26 bilateral air transport agreements with EU Member States prior to the pandemic. While direct flights between most EU Member States and Qatar have already been liberalised by those bilateral agreements, none of them include provisions on fair competition, or social and environmental issues, which the Commission considers essential for a modern aviation agreement.

In 2016, the European Commission obtained authorisation from the Council to negotiate an EU-level aviation agreement with Qatar, which started on 4 March 2019. While the agreement still needs to be ratified by the parties before formally entering into force, it will start being applied from today’s signature.

Similar EU comprehensive air transport agreements have been signed with other partner countries, namely the United States, Canada, the Western Balkans, Morocco, Georgia, Jordan, Moldova, Israel and Ukraine. Further air transport agreements with Armenia and Tunisia are expected to be signed in the coming weeks.

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