ECONOMY

No green recovery in eastern Europe

Good morning and welcome to Europe Express, your daily guide to what matters on the continent. Today, we will look at Romania and Hungary, which are giving us an early taste of the spending disagreements to come over the EU’s unprecedented €750bn recovery fund. National spending plans have started trickling in (France and Germany presented theirs together yesterday). But not all are in full alignment with the EU’s priorities.

We also have a scoop from Brussels on the EU’s latest plans to create an app platform to link up national vaccine certificates and Covid-19 tests in a bid to save Europe’s summer season.

And we will catch up with Finland’s government coalition, which is teetering on the brink of collapse.

Green spending blues

The EU is ploughing ahead with its recovery fund, but how the money will be spent in south-eastern Europe is already proving difficult for Brussels and capitals to agree on, writes our correspondent in the region, Valerie Hopkins.

Romania has delayed submitting its recovery plan after the European Commission indicated it was unhappy with Bucharest’s initial draft of how to spend its slice, which totals €80bn. While Brussels has been adamant about prioritising green investments and digitalisation, Bucharest wants — and needs — funding for highways and gas distribution infrastructure.

Hungary, which submitted its plan last week, is also expected to face resistance in Brussels over its intention to use 20 per cent of its recovery funds for education.

Scrutiny of Budapest’s plan has mounted after the country’s parliament voted on Tuesday to put 15 universities in the hands of private foundations controlled by boards appointed by the government of Viktor Orban (who has a reputation of allegedly misusing EU funds to enrich his friends and family). 

Romania, as well as its southern neighbour Bulgaria, have long struggled with corruption and abuse of EU funds. Bucharest’s pro-EU government — led since December by Florin Citu, the former finance minister — has tried to shake that reputation while holding firm on its spending priorities.

Romania, population 19m, has one of the EU’s shortest highway networks, with 806km throughout the whole country despite having a landmass similar to that of the UK. Experts estimate that the poor infrastructure costs the country up to 2 per cent of gross domestic product annually. The government has sought to prove to Brussels that it not only has the capacity to use the funds but that it also deserves to spend the money on infrastructure. 

Romania’s minister responsible for EU investments, Cristian Ghinea, is a technocrat who used to lead a think-tank analysing the use of EU funds. He told FT that the days when his country was unable to absorb EU money are over: “The commission has to acknowledge the fact that Romania entered a new period, we have the projects, but we need the money now.”

But commission president Ursula von der Leyen urged caution. “We need to target these investments carefully,” she said yesterday, noting that all 27 EU states had agreed to spend the recovery money on greening the economy and digital investments. “The Commission will ensure that these plans reflect our high level of ambition,” she said.

Chart du jour: The big supply squeeze

German industry is facing the biggest crush on supply in 30 years. A recent survey of manufacturers found that almost half were reporting shortages. (Find out why)

App-based travel

Brussels is getting its skates on to rush out a travel certificate to allow Europeans to get travelling in the summer, writes EU correspondent Mehreen Khan, who has gotten her hands on the bloc’s latest plans.

The internal EU document laid out a timeline for the system, which will involve all member states setting up app-based technologies allowing travellers to avoid quarantines when arriving in another EU country. 

An EU “gateway” will act as a hub to “receive, host and forward” certificates from its 27 member states, according to the plans due to be finalised by the end of this month. A pilot system involving five countries will get going in May, with fine tweaking to be done in time for a launch in June. 

The EU certificate has been hastily drawn up to prevent tourism-reliant countries or the cash-strapped airline sector from coming up with their own Covid-19 passports and repeating the uncoordinated measures that defined the first phase of the pandemic. 

An extra dose of urgency was injected into the scheme after von der Leyen revealed that the commission was in talks with the US about setting up a travel corridor to allow vaccinated Americans free travel to Europe. The Biden administration has remained silent on the topic. 

Finnished government?

Finland’s five-party centre-left coalition always looked unwieldy, but a row over spending may finally lead to its collapse, writes Richard Milne, FT Nordic and Baltic correspondent.

The government of Sanna Marin has drawn international plaudits for having five parties all led by women. Marin, who took office less than two years ago at the age of 34, was the world’s youngest serving prime minister at the time.

Sanna Marin
Finland’s prime minister Sanna Marin leads a five-party coalition government © Reuters

But bolting together three centre-left and green parties with the centre-right-leaning Centre party and the liberal Swedish People’s party was seen as a stretch by many observers in Helsinki.

Increasing spending and the very Finnish issue of peat production are two of the sticking points on which the five parties have failed to reach a compromise as negotiations stretch into an eighth day today — far longer than the two days allocated.

Broad coalitions have a history of problems in Finland. The so-called rainbow coalition of Jyrki Katainen, prime minister from 2011-14, included six parties and was widely seen as the country’s most ineffective recent government, in large part because it lacked ideological glue.

The country’s current leader, although having run a more effective administration, may stumble over similar difficulties even if the gender of the party leaders has changed.

Two things to watch today

  1. Germany’s chancellor Angela Merkel holds a virtual talk with Chinese premier Li Keqiang

  2. The Netherlands lifts its controversial curfew and allows cafés to serve outdoors

Notable, Quotable

  • France’s young voters are divided over voting for Emmanuel Macron or Marine Le Pen. (Find out why)

  • The EU is preparing tougher rules for state-owned companies, particularly those from China. The powers would allow the commission to block subsidised foreign companies from acquiring European groups or winning public tenders. (Get the exclusive details)

  • The European Commission is expected to put forward formal antitrust charges against Apple in the coming days.

Are you enjoying Europe Express? Sign up here to have it delivered straight to your inbox every workday at 7am CET. Meet the team behind Europe Express at this live event tomorrow. Do tell us what you think, we love to hear from you: [email protected].

Today’s Europe Express team: [email protected], [email protected], [email protected], david.h[email protected], [email protected]Follow us on Twitter: @VALERIEin140, @MehreenKhn, @rmilneNordic, @valentinapop.



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