The European summit which started on Friday and continued into Monday, where top politicians were meant to agree on the composition of Europe’s recovery fund (originally proposed at €500BN in grants and €250BN in loans), was painfully, excruciatingly long, even by European standards, but it appears to have finally concluded, and following some rather heated and angry comments – mostly aimed at the Dutch Prime Minister Mark Rutte who has emerged as Europe’s new paymaster now that Merkel has succumbed to MMT – we finally have a deal.
So what’s in it? As we previewed yesterday, instead of the €500BN in grants demanded by Italy and all the other deadbeat European states, and instead of the €350BN that the “Frugal Four” were willing to release, Europe has agreed on €390BN in total grants.
Here is the rest of the deal headlines, as summarized by Reuters:
- LATEST PROPOSAL FOR EU LEADERS ON RECOVERY FUND: REPAYMENT OF THE TOTAL 750 BLN EURO BORROWING BY EU COMMISSION UNTIL DEC 31, 2058
- LATEST PROPOSAL FOR EU LEADERS ON RECOVERY FUND: 70% OF ALL GRANTS TO BE COMMITTED IN 2021, 2022, REMAINING 30% IN 2023
- GRANTS IN 2021 AND 20222 TO BE ALLOCATED ON THE BASIS OF, AMONG OTHERS, AVERAGE UNEMPLOYMENT IN A COUNTRY IN 2015-2019
- IN 2023, UNEMPLOYMENT CRITERION FOR GRANT ALLOCATION IS TO BE REPLACED BY GDP FALL IN 2020-2021 -DOCUMENT
- ASSESSMENT OF NATIONAL RECOVERY PLANS TO BE FINANCED BY THE EU RECOVERY MONEY WILL BE DONE BY EU MINISTERS VIA QUALIFIED MAJORITY, BASED ON A COMMISSION PROPOSAL
- POSITIVE ASSESSMENT OF PAYMENT REQUESTS WILL BE SUBJECT TO MEETING RELEVANT MILESTONES AND TARGETS – DOCUMENT
- EU GOVERNMENTS WILL HAVE TO SPEND 30% OF THE RECOVERY FUND MONEY ON MEETING TARGETS RELATED TO FIGHTING CLIMATE CHANGE – DOCUMENT
- OVERALL AMOUNT OF THE EU’S NEXT LONG-TERM BUDGET FOR 2021-2027 IS TO BE 1.074 TRILLION EUROS -PROPOSAL DOCUMENT
- EU MONEY FROM THE EU BUDGET AND RECOVERY FUND WILL BE LINKED TO GOVERNMENTS OBSERVING RULE OF LAW -DOCUMENT
All of the above is, of course, meaningless and the only thing that does matter is whether the ECB will keep monetizing all European debt issuance. The rest is just boring, very, very boring theater of the kind that Europe’s has perfected over the past two decades.