The Russian invasion of Ukraine has sparked a debate on whether the EU should issue new common debt to deal with the social and economic consequences of the war. Those in favour contend that the expected budgetary costs of the war for the EU will be too high to be covered by the existing EU instruments –the €800bn Covid recovery fund and the multi-annual EU budget. Of course, part of these costs will fall on the Member States but given the ECB’s intention to scale down its bond-buying programme, they argue, there will be tensions in the financial markets if the EU does not step in. Others reject the idea of issuing new EU debt. They consider that there´s still plenty of unspent EU funds, notably from the Covid Recovery Fund. Rather than issuing new EU debt, they call for re-channelling the available EU funds to respond to the current crisis.
In reality, this is not an either/or question. There is no doubt that the economic and social consequences of the war will be significant and asymmetric across the EU. Some sort of solidarity mechanism may be warranted in the near future to keep EU´s unity, share the costs of sanctions and/or finance new agreed strategic EU investments. Still, the setup of new EU instruments takes time. You have to build up consensus on how much additional money is needed, what for and how to distribute it across Member States. This cannot be done overnight. In the meantime, we should explore what can be done with the available EU funds and how to make good use of them.
Rubio E. 2022. “What the EU budget can and cannot do in response to the war in Ukraine”, Policy brief, Paris: Jacques Delors Institute, 21 April
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