HONESTLY BROKERING A COMMON EUROPEAN APPROACH TO ECONOMIC RECOVERY A REALISTIC MFF AND GREEN RECOVERY… HONESTLY BROKERING A COMMON EUROPEAN APPROACH TO ECONOMIC RECOVERY On 18 May, the leaders of Germany and France proposed a one­off EUR 500 billion rescue fund to support the European Union's economic recovery in a post-crisis scenario. Under this bold proposal, funds would be made available as grants to the hardest-hit sectors and regions in the EU, based on the model of financial market loans, as a solution agreed upon following weeks of debate between EU leaders over which financial mechanisms should be employed as drivers of economic recovery. In the initial discussions over this framework, the governments of France, Italy and Spain had favoured grants, whereas Berlin and the Hague advocated loans as the best means for stimulating economic recovery. However, as pointed out by German Chancellor Angela Merkel, the recovery plan eventually put forward in coordination with France is a»short­term« response to the crisis, paving the way for long-term solutions that would include EU reforms. Thus, the idea of securing immediate financial stability and predictability to a certain extent is consistent with the German position of acting as an honest broker in forging a common European approach to crisis management and further economic recovery, despite the exceptional nature of this policy option. In a nutshell, the proposal put forward by Germany and France implies that the European Commission would take on this debt in the form of joint bonds with a long maturity, with EU countries assuming liability, and no repayment being required for the aid provided from this fund. However, a group of countries, the so-called»Frugal Four«, made up of Austria, Denmark, the Netherlands and Sweden, presented their own draft proposal for an EU recovery fund, with the basic difference being that the aid funds are to be repaid. The alternative proposal by the»Frugal Four« is similar in scope to the Franco­German initiative, envisioning investments in research and innovation, healthcare, green economy and the digital agenda, yet avoidance of debt mutualisation stands at the core of disagreement between Germany and France on the one side and the»Frugal Four« on the other. The position of the»Frugal Four« is also based on several principles for»efficient and sustainable recovery«, which are meant to underlie the future EU Multiannual Financial Framework and reconfirm a way of thinking regarding what a »modernised EU budget« should mean in their view, including savings to be made in the MFF by reprioritising in areas that are less likely to contribute to recovery, frontloading/ temporarily topping up COVID-19-related expenditures to help kick-start the economy and speed up recovery, producing a strong, financially sound and sustainable budget, with an overall level and composition of expenditure proportionate to strategic priorities, and an unchanged position regarding the MFF. The»Frugal Four« would like to uphold the position that national contributions be limited, recalling and underscoring that the rationale underlying corrections»still applies«. But where does Eastern Europe fit into all this? Madrid and Rome may be more pleased by these plans, but can Warsaw and Bucharest share in this feeling? Several Eastern European states are not Eurozone members, so a key element in any pan­European debate needs to be their interest in having an access to funds. Interestingly enough, looking at the European Commission's own proposal for a Recovery Fund, which is to be linked to the EU's next long-term budget, the Eastern European perspective appears to have been virtually ignored in the wider EU-level dialogue. Limited coordination between Central and Eastern European capitals, as well as a feeling that it is important to be constructive in a crisis, also explain the absence of a coherent or strong CEE voice in the framework of talks involving recovery, but cannot rule out a future narrative of discontent as regards risk and responsibility-sharing across the European Union, especially as the COVID-19 pandemic has not had as severe an impact on Central and Eastern Europe as it has, for instance, on Italy or Spain. Against this backdrop and in view of the desire to position itself as an»honest broker« in recovery talks, the German EU Presidency needs to encourage an extensive dialogue with CEE capitals, bearing in mind that EU­level solidarity, as a precondition for the success of post-crisis recovery efforts, is grounded in a deeper understanding of medium and long-term benefits of risk-sharing and confidence­building. Otherwise, even if the EU seems to have learned its lessons from the previous crisis, moving to prevent a North­South divide, it would face the risk of an»East vs Rest« fault line. A REALISTIC MFF AND GREEN RECOVERY… European Council President Charles Michel presented a joint roadmap for recovery, prepared together with European Commission President von der Leyen, ahead of the leaders' video conference held on 23 April, dedicated to the EU's response to the Coronavirus pandemic. The report stated that»the future multiannual financial framework(MFF) will be a key instrument to support a lasting recovery and a fully functioning and modernised single market.« It also stated that»the MFF will have to take into account the effects of the crisis on regions and affected sectors, including by revamping key programs to maximise their contribution to repair and recovery.« The European Commission put forward an updated MFF at the end of May and, with an optimistic timeline, EU leaders are expected to reach an agreement on the EU's budget in the second half of June, whereby the European Parliament also has to rubber-stamp the proposal and see to its implementation. However, as has been seen to date, consensus on the MFF has not been easy to achieve, even under non-pandemic circumstances, as EU leaders failed to agree on the main features of the MFF in February. Thus, further negotiations on the MFF may extend well into the German EU Presidency, further formalising Germany's arbitration role in reaching a consensus on some of the most ambitious elements of the multiannual budget. In this regard, to put it bluntly, nothing unites the 3