Green MEP accuses Germany of ‘setting a bad example’ in stimulus package –

Germany’s draft stimulus package promises that 80% of EU stimulus funds will go to climate protection and digitization, far beyond the EU’s demands. However, Green MEP Sven Giegold complained that only a quarter will go to future investments and most of the money is going to old projects. EURACTIV Germany reports.

This year, EU countries will start receiving money from the stimulus fund, funded by common European bonds. Like all member states, Germany must submit its stimulus package indicating where the money should go. The first project went through the cabinet in December.

The Green Party has expressed opposition to the proposal, saying the majority of the money will be used for debt restructuring. More specifically, it will finance projects that have already been decided and that would otherwise have been paid for by taxes and the national debt.

Only around a quarter has been used for new projects, said Giegold, MEP in the European Parliament’s Committee on Economic Affairs.

German change of mind

Under the stimulus fund, the EU will go into debt together for the first time and collectively be responsible for financing the economic recovery.

The decisive factor was the turnaround of Germany, which had vehemently opposed any form of solidarity debt following the 2008 financial crisis.

The stimulus fund was then decided in July 2020, producing a fund of 750 billion euros, of which 672.5 billion euros were to go to member states in the form of grants and loans, the rest going to the programs of the ‘EU.

States that have been hit hardest by the crisis receive more. Germany is expected to receive 23.6 billion euros in the form of a non-repayable grant.

Governments submit their recovery plans to the Commission for approval, and they must meet specific requirements. For example, at least 20% must go towards digitization and 37% towards climate protection.

Can the EU’s economies grow enough to pay off the growing debt?

The COVID pandemic is putting pressure on the sustainability of some European economies, prompting some to argue that economic growth and monetary support from the European Central Bank will not be enough and that public debt should be renegotiated.

“Formally correct, politically bad”

The planned German recovery plan meets both objectives: digitization and climate protection are each affected by 40%.

But the majority of the plans had already been decided, Giegold said.

He told EURACTIV that, formally, Germany was doing the right thing. The rules of the stimulus fund allow retroactive financing of already approved national programs – from February 2020.

The German projects that have been approved come from an economic stimulus plan presented by the government in June and total 130 billion euros.

“Formally, everything is correct, but politically it is bad,” said Giegold. Germany “sets a bad example” because “we don’t want Member States to use [the recovery fund] to pay old debts, but to take a leap forward.

“Make Germany ready for the future”

However, it is possible that the government already planned to finance part of the programs through the EU reconstruction fund when it decided on the economic stimulus plan, even if it was not communicated at the time. .

Germany’s finance ministry says it did everything right.

“With 80% of the funds earmarked for climate protection and digitization, the German stimulus package not only meets the requirements of the EU’s stimulus fund, but in fact goes far beyond it,” said a door -speak of the ministry to EURACTIV Germany.

“In this way, we are preparing Germany for the future. “

[Edited by Benjamin Fox]

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