“Post-corona recovery”: Baltic States’ enhancing responsibility in priorities

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All EU states, including those in the Baltic Sea area are facing with an urgent task of discussing and adopting the “post-pandemic” socio-economic policies. The latter have to be responsive to peoples’ needs and be oriented to optimal future growth strategies. Such a task requires adequate analysis of countries’ specific sectoral priorities and re-assessment of the forward-looking political economies guidelines.  

  In contrast to the EU-wide approaches in tackling the pandemic, which has been generally through financial injections “a-la-quantitative-easing-type”, the member states have had a different approach: i.e. creating feasible “post-pandemic” socio-economic policies.  
  The European Commission, together with other EU institutions and ECB, from the early days of the health crisis in early spring, made it possible for the states to increase public spending, often contrary to the straight-jacket-type of the EU’s traditional state aid rules. Thus, e.g. the ECB’s monetary measures managed to initiate national socio-economic decisions in order to neutralize the pandemic effect and tackle the emergency situation.  
  The EU’s financial measures, like the subsidized loans provided necessary support to previously inefficient national development programs claimed for a miserable attention to SMEs and other corporate entities, as well as support generally forlorn public health systems.  
 More on the EU efforts in, for example: EU and the Baltics: assisting in crisis. In: http://www.baltic-course.com/eng2/editors_note/?doc=21222; – Managing COVID-19: additional support for science and innovation. In: http://www.baltic-course.com/eng2/modern_eu/?doc=156062; and European rescue plan and solidarity. In: http://www.baltic-course.com/eng2/modern_eu/?doc=156211  
  Finally, the EU managed to streamline a recovery process through the so-called “the next generation EU’s scheme” with €750 billion, five times the EU’s annual budget. After years of Commission’s dominance in the intergovernmental decision-making, the EU-wide initiative reflects solidarity in a visible and practical thing: i.e. providing support to the weakest, with a feeling of “common interest” as a value aspect of the European culture. The recovery package is to be discussed by the EU-27 states’ leaders during 19-20 June, 2020; it seems the discussions would not finalized the unanimous agreement, as some divisions in approaches to spending from numerous countries have been already in sight.  
We’ll inform the readers about the final result in the EU’s recovery package in due time…  
  Member states’ strategies 
  The EU institutions and the states’ actions shall be of a double nature: EU’s common socio-economic policy doesn’t rest on the monetary policy alone; the main task is that of reconciling the differences among the European countries. In this regard, huge amounts of the EU’s financial resources will put the states’ governance to the test: these resources are “shared” among the EU-27 according to the plans drawn-up by the national governments. “This is not going to be a case of easy spending, treasure troves or fanciful schemes”, noted recently Commissioner Paolo Gentiloni.  
Reference: Commission press release/14.06.20, at:

  Several European funds can contribute to the immediate response in the states: e.g. more flexible cohesion funds as well as some other EU sectoral-specific funds, such as “ReactEU” and the “Just Transition Fund”. Besides, some loan packages are of particular advantage to support health systems, industries, SMEs and short-time working schemes.  
In particular, the EU’s Recovery and Resilience Facility represent the main tool of the “Next Generation EU package”, which provides additionally €310 billion in grants and €250 billion in loans for the member states (for example, Italy can receive €172.7 billion, of which €81.8 would be grants and €90.9 would be loans) as the EU state which suffered most. These amounts are available to the states without any co-financing, and can be supplemented by even higher loans.  
Other highest amount of financing under the EU’s “recovery instrument” would go to: Spain – €140.4 billion, with €77.3 billion in grants and €63.1 billion in loans) and Poland – €63.8 billion, of which €37.7 would be in grants and €26.1 billion in loans.  
  Therefore, the first challenge for the Baltic States’ governments will be to make full use of this “recovery facility”. It is a fascinating and complicated challenge because it will require national investment and reform packages with a clear priority direction, with agreed schedules and milestones, and with legislative measures aimed at finally expected results. A substantial proportion of the EU resources (about 60%) will have to be committed by 2022.  
  The message to the member states is clear: these resources (and the way they are distributed) will be mainly directed to tackle such pressing issues as reducing tax evasion, improving active employment policies, activating youth and women’s employment, improving education, resolving regional disparities, addressing the efficiency of the public services and national civil justice system. 
  The task ahead during next three-four years for the Baltic States’ governance is both to re-direct and newly prioritise the existing challenges with the help of above-mentioned exceptional EU’s financial resources. The national recovery plans shall be designed by the end of 2020, as the latest, and should be particularly geared towards two major European challenges: a) the “green deal”, and b) the digital transition; in short, the EU countries have to speed up the process of sustainability in all socio-economic sectors.  
  Countries in the Baltic Sea region have to react in a new way: that means turning away from pro-cyclical policies in favour of adopting extensive sustainability policies (even in situations of limited budgets). No doubt, this would inevitably mean that all states would have to break “common budgetary rules”; and the Commission has suspended it anyway to avoid mistakes made in the past decade, when premature fiscal tightening caused second waves of recession.  
The present health crisis has made it clear the importance of the national government’s measures being “pro-European”; this choice would define the cooperative priorities of present governance systems to both supporting nationalistic feelings and implementing the EU-wide strategic solutions through sustainability and digitalisation.  
The COVID-19 crisis raises questions, not only about its immediate impact, but also about the long-term economic and societal implications for the member states and the whole European Union’s integration. The European Commission has responded to the crisis with a variety of measures, including, most notably, the EU’s recovery plan NextGenerationEU, to be finally approved during June and July 2020.  
 More in the Commission recovery plan proposal, published at the end of May in: https://ec.europa.eu/commission/presscorner/detail/en/ip_20_940
  The main question for popular discussions in the Baltic States would be: how the states’ governance and the EU’s institutions shall develop strategic approaches to challenges arising from the crisis, which are vital both for the states’ future prosperity and the survival of the Union.  
  Therefore the lessons to be drawn from the crisis shall make the states’ growth and that of the Union more resilient: e.g. to prepare a “strategic foresight” for all EU-27 states through the analyses – with the assistance from all social partners- of major political, economic and societal trends in order to build up the resilience to future shocks.  
18.06.2020, Copenhagen

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