Green Deal: The Domino Effect

Green Deal: The Domino Effect

The European Commission’s legislative ambition for the Green Deal will be profoundly impacted by Covid-19.

For some, re-starting the EU economy is an opportunity to achieve the goal of carbon neutrality and a genuine circular economy. For others, these goals should take a back seat during recovery from the crisis.

This special “Green Deal” Comitology Newsletter explores the legislative and regulatory labyrinth of the European Green Deal agenda and analyses lobbying strategies in the current turmoil.

While the Single Market of 1992 was based on the notion of scale, the Green Deal is based on a change of paradigm.

It represents a hugely ambitious project that, even before Covid-19, was being frustrated by a European Council reluctant to provide the Commission with the necessary funds.

The Covid-19 crisis has moved the European Union into unknown territory, full of danger. The risks are such that every economist, political scientist and forecaster is now wondering about the sustainability of the European Union and the Euro.

  • First, the financial perspectives revealed a multiannual budget of € 1,000 billion for the 2021-27 period. With Covid-19, the figure has to be multiplied by 10. In effect, a total of +/- 10,000 billion (i.e 75% of the annual EU-27 GDP!) could be needed in 2020-2022 to absorb the shock and relaunch the economy. This massive sum will be financed by the MFF, Transition Fund, Green Deal Investment Plan, European Stability Mechanism, European Central Bank and national plans.

  • Who is going to pay? The EU will be divided between resistant countries and assisted countries. The resistors include the new “League” (Ireland, Netherlands, Denmark, Sweden, Baltic states) and the Visegrad group. Among the assisted, there are Italy and Spain for sure, but no doubt France too. The Franco-German competitiveness gap will become huge, with Germany reinforcing its economic leadership, and France in agony.

  • Some renowned economists say the Euro could either fail or rupture. This scenario is not foreseeable as it is not feasible: how could we live day to day with a currency that no longer exists? Most likely scenario: the Euro survives in the medium term, but with the weakest members losing major purchasing power. In Italy, Spain and France we may expect large-scale social movements that will endanger the very existence of the EU in its current form.

  • The EU Institutions will enter into a long battle marked by a structural alliance between the Commission and Parliament, while a divided European Council will try to dilute the Green Deal and slow down its implementation.

  • This same logic of conflict will prevail at stakeholder level, with a civil society eager to change the world (“no more business as usual”) and a business sector focussed on its survival in an economic and social environment deteriorating long term both in the European Union and worldwide. Instability and conflict are the two words that come to mind when analysing the Green Deal after Covid-19. Institutional balance, Member State relations, stakeholder interaction: nothing will be like before. We have to get prepared.

Daniel Guéguen

More articles to read in the Comitology newsletter Green Deal edition

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