The cracks in europes foundations. Carona recovery deal can the e. U. Rebound thats our title. And its a pleasure to welcome our guests eric is an american journalist who has written for the Los Angeles Times amongst other Media Outlets and he says the summit exposed once again how much disunity there is in the European Union. And were very glad to have with us pavel took of tomasky he took us to excuse me he is a polish economist and senior associate at the German Institute for international and Security Affairs he says we must reform the Member States now or will face the same problems again. With less time and fewer instruments. And great to have with us once again casting emily and she is Deputy Editor in chief as the Parliamentary Bureau of the german newspaper so touched sayto and she says the deal is far from perfect but it is a signal that multilateralism is still alive. And let me start with you cast him and ask for your take on the big picture there are a lot of supra lives being thrown around here a historic a breakthrough chancellor merkel saying its a huge step for the e. U. Would you agree with all that i would say yes its a huge step forward for drummond and also for do you have because germany basically changed my mind in giving out. And said offer loans but i would not miss all these people that are saying its now a historic moment because i think history is right. On the positive form the form the future the historians have to jack rabbit it was historic for the moment now it is a big problem how would you say it as an economist is the most significant moment to do you print a comic integration since the creation of the euro because so far weve heard. Financial systems which consist of loans you know we hear for grants and those grown so quite some substantial do something drones 750000000000 a fuels however from the comic respect for mo i think that the most important piece would be doing coal will long be able to stabilize the market. Thank you very much and well come back to that point a little bit later on. How would you come down on this historic or less so what we just heard from pavel indicates it is indeed a very very big step how do you see it all the mutualization of debt for the 1st time is a big big step and something that was long overdue the e. U. Could have done this a decade ago the eurozone crisis might not have been severe as it was but on the other hand 5 days and 5 nights of negotiations for this deal that could have been done in a day is a bit of a farce and it just showed the e. U. The e. U. Is far from you know united and what the problems facing the e. U. And facing the world its not really. Making a very fit for the future when they take 5 days to get a decision like this done and i may say that i mean do you if its united otherwise you would not have a deal i mean i agree with you its less rare event difficult 5 days and 4 nights to negotiate a small sign and but im sorry by the end desa do you want to be black eyed about congress and abroad they never manage to make a deal and he is even made by 27 national Member States one last big picture question to you pavel before we take a look at some of the details of this deal it was a compromise as both essentially have have conceded with significant tradeoffs made by pretty much all interested parties the question is whether the result justifies those concessions of course just as far as theyre called concessions something we have to bear in mind that we have in the in the u. Turn to sort of a different Member States with different size different the comic systems and for some of these Member States is really a huge step forward like from the netherlands before sweden to actually to go on to their common debt to come in come on the government come on move transfers which would go to the south so this is huge step forward to reach nobody in those compass expect that the police just of this comes will have to face the criticism at home so let us in fact now take a closer look at the corona recovery package and those northsouth divisions that it provoked. It was clear theyd be a fight over the 750000000000 Euro Recovery Fund and it exposed deep roots within the e. U. Countries like italy and spain whove been especially hard hit by the corona pandemic who have time to counter resistance from countries like the netherlands and austria that would prefer to save money to marathon the goshi ations they reduce the amount of direct to 390000000000. 00 for the 1st time the e. U. Will issue common debt despite all the haggling the current president of the council was placed. And i think this is a clear signal that goes beyond europe that this very special structure that is a very special entity a European Union consists of 27. 00 Member States that can act together despite their very different backgrounds and have proven they have the capacity to act that is a good sign. But it does signal. What is the deal actually worth. You talked in your Opening Statement about the disunity exposed by the deal in fact there were moments where it looked as you said of course the 5 days as if there might not be a deal would you say those north south divisions will leave lasting scars absolutely its not just north south no its east west we saw small groups of Eastern European countries able to blackmail their interests we saw the small frugal zabel to force their interests through the e. U. Used to be led by france and germany kind of leading the way and now people are getting away with in the wake of britain leaving the e. U. Smaller countries are coming up with their special interests and its a scary moment if you think the world the way the worlds going with china the United States these big power blocs in the e. U. Here in the middle with 27 countries hadlee over small Little Details is the e. U. Going to be able to compete with these big countries in the world of the future. Yeah i am im sorry but i its totally different actually what i see does is bruv that liberalism is still alive i mean 27 Member States make a deal and its sure it took a very long time and you still have to division between a sows and north and east and west draw but i mean to special situation here was did no money on to monch germany was in the one line vista madeleines austria and the finnish countries that say de are frugal so actually germany was the leader in saying austerity and after a crisis suddenly there was a change drum and politics and a big change so drummond he stepped away from a story. And went to the 22 fronts again and then they had 2 strong french drome and motorola that basically came out with this proposal to deliver a 500000000000 in grants and just was a big change i mean we were in fact told by the german press at least that the chancellor seemed to be favoring the colors of the tricorder treacle or the red white and blue yet would you say that there is a lasting change here to the balance of power in europe in part due to chancellor merkels decision to go to the other side i mean you see clearly a dad wanted me instead. To miss not here anymore because Great Britain was also balancing as a big power the european decisions and i would not be sure that as a permanent shift from germany. To did to decide off disallows and countries of the sas and become trees but on. The other side i would say days no i toted to really watch what germany do i mean dollar for big. Economies now are left over in your opinion and they have to Stay Together otherwise do you appeal into the market which is by the way the biggest in the in the road to break away. Have a little bit lets talk a bit about some of the economic details of the situation in which europe finds itself before the countries went into the summit the leaders went into the summit there was a lot of talk about the eurozone survival being at stake largely because of the divergence between northern and southern economies if we look at the current numbers germany the netherlands it looks like theyre going to see an Economic Contraction this year of around 6. 5 percent spain and italy or more are almost double that so will this deal now close that gap the head of the European Central bank has said that gap is putting the very survival of the euro in danger do you think the deal will get money to those southern countries in such a way and quickly enough that it can close that divergence. I salute greed of the diverse diverse with not only in the euro area but especially of the Single Markets is a very. Very bad thing and whats changed the minds of the leader of the summit i think its was the throats above the. Din with of the Single Market that someone comes through self theyre calling a crisis were actually developing. The book from the east in those come through scum actually change the Political Alliance of those countries so the economic divergence can cause social to have a divergence and social theyve theres a version that can have a vote in the got to embark on the political unity of the you know and i think that although the deuce understood it very well and thats why we have decisions at the summit so let me ask you this eric. The dire economic prospects that are facing those southern European Countries are not only of course due to corona there were macroeconomic weaknesses in spain and italy and elsewhere that preceded the crisis the. Google for were determined to make sure that this recovery package essentially helps to remedy those macroeconomic weaknesses by imposing whats called conditionality do you think that we will see true reform on the basis of this deal i think they have to and i think the reason germany switch sides and was suddenly in favor of collectivizing debt is because merkel realized the corona is a one time thing its an exceptional circumstance the problems with coronas not only because of the economic problems theyre having before as you also realize piling more debt on these other states was going to drive them into into really dire straits so this is a one off perhaps well see but i think miracle also realized it was the right thing to do and there will be controls now the netherlands push this through that they will control with it conditionally to make sure the money is being spent on things to help mitigate the impact of coronas so if youre a frugal person you have to say well ok well see how this works. Not a bad deal could have been better but at least this will go for corona related issues next year america will be gone its unlikely another conservative chancellor would do this again so i do think this is a one off this will be limited to the Current Crisis and hopefully the money will go to the right places in these countries to help them overcome the quota crisis test and one of the points of criticism for some observers its what is what theyre calling the governance architecture of this meeting those conditions that i mentioned that are supposed to ensure reform in the southern european economies that theyre going to be essentially overseen by other e. U. Leaders not by the institutions in brussels but by the European Council itself isnt that a recipe for ongoing divisions and delays. I must say because it is actually possible that a different Member States can. That different country what kind of shit they have to do and what kind of films they have to do i mean in the European Union all Member States us of oil and National States and its actually on possible that another state can tell you what to do on the other hand i think that that was the reason why they had to find a compromise i mean taxpayers from all the form on National States got on teaching these grants and the debt is a common debt in a way and that means also that the german taxpayer us. Taxpayers from the netherlands want to make sure that the money had at this now on the table they would be spent on their life today and i think it is also a common understanding that there has to be a kind of control in your Opening Statement referred to the need for reform in Member States do you think this conditionality is going to do the job. I dont know is difficult to say because we have the extreme time pressure the Member States will have to pick programs to get the money in a very short time and those programs will be also is by the group in commission by the Member States so its. Difficult to say what kind of quality of his project will be and where the money will be spun demoing the institutional deficiency is most Holding European comes through thats going to be a challenge let me come to a different point all of you have mentioned the provisions for common debt basically the idea is that much of this recovery package will be financed by borrowing on the Financial Markets by the European Union commission now when that proposal was 1st made to eric. The german finance minister referred to which are essentially made the analogy to the socalled hamiltonian moment for you and me as americans i think a lot of us know about that moment because of the musical hamilton but let me just remind our visitors it was the moment in 17. When the very 1st treasury secretary of the United States persuaded those nascent american states still very young to accept common debt that essentially was the 1st step toward u. S. Fiscal integration which is made the us an absolute powerhouse also one international Financial Markets is the same thing happening here. No this is a very very small step in the right direction but a small step in way too late that was 1719 the United States was able to florida blossom because of that promise and the promise to pay back all that debt the United States has always paid back on the money its borrowed and thats why the u. S. Is such a great creditor and the e. U. Has been hemming and hawing about this question for 2 decades now the euros been around for 20 years but theres no collective debt and thats the fundamental flaw the fundamental weakness of the euro and they knew about this 10 years ago when the eurozone crisis flared out of them and talking about it ever since and now theyre taking a small very baby step towards the hamiltonian moment hopefully it will be there will be something that will bring bring the give the euro some some power but im skeptical i doubt its more than a one off test in the here and only moment if i can just say this talent on the moment wasnt actually a moment it was a process of fiscal integration that went on over decades into still not finished in the u. S. Yeah and i think the 1st 5 loss in tokyo thing off the euro navi have to 2nd step with a common depth and i think we have to take a decision or youre a passive take the decision of either david continue and out today and also the next chance. That you perhaps its a green one you never know how but we have to decide do we go straight on this way or do we stop and then we have to give up also does common currency i think at the point that they have to take a decision that ridgeway public and i get you to weigh in very quickly on the coming debt is there. I would like to remind this is not the 1st time to use issuing death surely you will see sure in the depths of the last 10 years but that is going to be the biggest step you know it was in small amounts only for loans and would be for the 1st time which is sure in the programs so this is this is new and the question is if we are the conditionality of that will be Strong Enough for the us and sultan drop to actually use this money properly because for some will be the last chance to reform the contras there will be no 2nd chance so a lot riding on this and a lot riding on another aspect of the deal as well it wasnt only northsouth tensions over frugality that nearly torpedoed the negotiations at the summit so too did east west divisions over linking e. U. Funding to recipient countries compliance with european principles and Democratic Values and rule of law heres more. The text that has been agreed on the rule of law has improved. Its a very clear in the document a very clear commitment to the rule of law and a very clear commitment to the protection of the financial interests of the union and the rich try to make a connection between the rule of law budget. Was successfully rejected. So cast in pretty contradictory assertion is that theyre also left on their law in viktor orban whos right it basically everybody did win because we have a close about in this in the statement off of this damage that they say ok we have to put the paying 2. 00 off law to fulfilling the role of saw 5 deaths a little 2nd sentence which says ok but the Member States have to decide so basically all set off on the line is right by saying ok we dedicated our money to to guarantee that the states that didnt get the money even. In light of this want to throw a death also some truth to it which is saying going to direct it but he can veto such a decision. Let me ask you again your opening state statement talked about the need for reform and also your concern about whether there are enough instruments in the toolbox of the e. U. To compel reform now your own country poland has been under ongoing pressure from brussels for i