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THE LAUNCH OF THE ECONOMIC RECOVERY FUND HAS GENERATED A CONSTITUTIONAL CRISIS IN FINLAND What will Europe built on a lie look like?

Călin Rechea
English Section /

What will Europe built on a lie look like?

The European Commission's statement on the "EU budget that fuels the recovery plan for Europe" states that "most of the recovery measures will be funded by a temporary recovery instrument, Next Generation EU, with a financial capacity of 750 billion euro". It is further emphasized that "the instrument will be an exceptional and temporary emergency mechanism".

The statement is unfortunately inaccurate. Or it can be considered "fake news", but this does not change its true nature at all, that of a blatant lie.

An article on the Politico website, entitled "Towards an ever tighter and more imperfect union," recalls that the terms "exceptional" and "temporary" were included for political reasons, in order to gain support from Berlin and other northern European countries, but "they do not reflect the true nature of the program."

"The agreement does not contain the recipe for the EU's success, but the seeds of its failure," reads the end of the article on the Politico.eu website.

The first signs of that came from Finland. Statements by Päivi Leino-Sandberg, a professor of European law, have recently appeared in the national press, according to which a constitutional conflict has arisen between the Grand Committee and the Constitutional Committee of the Finnish Parliament.

In the opinion of the Constitutional Committee of the Finnish Parliament, the allocation of non-reimbursable financing, obtained from loans, to EU states is a major change in the nature of the European Union, and this requires the approval of a two-thirds majority in the country's Parliament.

As stated on the Helsinki Parliament's website, the Grand Committee is responsible for evaluating EU legislative proposals and clarifying the parliamentary views.

The Grand Committee also has the power to make decisions and must ensure that "EU issues are resolved on the basis of comprehensive democratic foundations".

In the absence of a Constitutional Court, the Constitutional Committee of the Finnish Parliament expresses opinions on the constitutionality of laws submitted for evaluation and other issues related to the functioning of the state.

Professor Leino-Sandberg has levied a harsh criticism against prime-minister Sanna Marin for ignoring the recommendations of the Constitutional Committee, just as they were ignored by the Grand Committee.

The European law professor also accuses Sanna Marin of making misleading statements about the nature of the recovery fund.

"It will be implemented only once and will not become a permanent tool," said the Finnish prime minister, but Professor Leino-Sandberg stressed that "its structure is valid for 40 years, so it cannot be seen as temporary", and "its being defined as an exceptional instrument was necessary because otherwise there would have been too great a deviation from the European Treaties".

After harshly criticizing the new European program on his Twitter account, Tuomas Malinen, a professor of economics at the University of Helsinki, wrote about the need for a referendum in Finland in an article in the online publication Uusi Suomi (New Finland).

Malinen considers the euro 750 billion fund to be, in fact, an "anti-recovery instrument" and stresses that "the fund will have an impact on the EU's financial structures for the next 40 years", i.e. "it is a permanent instrument", which will surely be used in the future as well".

Moreover, "the fund represents the initial stage of the transition to a union of transfers and the introduction of a federal government", which is achieved through "a clear violation of Articles 125 and 310 of the Treaty on the Functioning of the EU".

The article by Tuomas Malinen also includes a justified attack on the government, which not only ignored the recommendation of the Constitutional Committee, but also violated its own governing program, which states that "each member state has the primary responsibility for its own finances."

If something like this is happening in Finland, what could one expect from the governments of Central and Eastern Europe or the outskirts of the Eurozone? Is true European convergence just a "race" towards the lowest common denominator, i.e. it is going downwards, despite the high hopes "sold" to the citizens of all Member States?

In this context, Professor Malinen states that "this is not the European Union which we have joined" and argues that it is absolutely necessary to hold a referendum to resolve the constitutional crisis in Finland.

Commenting on Tuomas Malinen's article, a reader echoes the need for a referendum and says that "if the recovery fund is approved, then we must start the process of withdrawing Finland from the Eurozone and the EU."

Another reader points out that "it is a truly exceptional situation, if we do not even have to worry about worthless economic arguments, when the fundamental issue is that Finland and the EU are violating their own laws and regulations."

The economic irrelevance and special political importance of the European recovery fund are also the subject of a recent article in The Telegraph.

Ambrose Evans-Pritchard writes that the fund is "a toy gun economically, but a heavy cannon politically".

His further question should cause extreme concern and represent a call to action by those who still believe in European democracy.

"Where else in the world does an institution that has not been directly elected have the right of initiative in terms of legislation, the executive power of a proto-government and the prerogatives of allocating the expenses of a parliament, all gathered in one place?" the British journalist writes.

The reference of course, is to the European Commission, which can be characterized, in the opinion of the British journalist, as a "Caesar-Papist-like construction, on the verge of totalitarianism, without true parliamentary control".

If for countries like Romania no one has any hopes for the responsible use of funds, will things be different in the basic pillars of Europe, such as France?

Before the meeting of European leaders began, Patrick Artus, chief economist at investment bank Natixis, wrote that "France will face another shock of de-industrialization", despite hopes of bringing industrial companies back to the country.

The reasons are simple. "France is characterized by high labor costs, a relatively low level of labor skills and a limited degree of modernization of companies," the French economist said.

As the profitability of industrial companies is also low at the OECD level, they will seek to relocate their operations to low-cost countries to regain their profitability in the post-pandemic period.

The way in which the use of financial resources from the recovery fund is being promoted, at least so far, shows that they will not easily find their way towards programs meant to increase competitiveness and efficiency.

The reason is simple, once again: the need for comprehensive structural reforms, which the European authorities believe they could do from top to bottom, through a kind of medium- and long-term plan.

Unfortunately, something like that is no longer possible, and the authorities lack the courage to free private initiative in the SME sector and create a competitive framework which would remove the privileges granted to large corporations.

Under these circumstances, the amounts allocated to France from the recovery fund will not change the situation at all. Despite expectations, the effect could even be negative, amid massive uncertainties about the effectiveness of the allocation of funds, even without any noticeable influence of the political factor.

The chief economist at Natixis then issued a much more serious warning. "The economic policies recommended today can lead to major social problems," says Patrick Artus, amid expansionary monetary policies that can no longer be reversed.

These policies have already led to higher financial asset prices and real estate market prices, and the effect is to increase wealth inequality in a period marked by little or no increase in household income, as Artus points out.

On the other hand, there will be a significant decrease in the purchasing power of the population, given that there is pressure to bring back into the domestic economy production capacities or other activities that have been "outsourced" to low-cost economies, as well as the trend of accelerating the switch to "green" energy sources.

Both of the above will lead to an increase in production costs and prices, with particularly negative effects on purchasing power, according to the analysis of Patrick Artus, who emphasizes that a social crisis is inevitable.

It almost seem overkill to add to this "volatile" mixture the violation of EU fundamental laws with impunity precisely by those called upon to defend them and their increasingly visible contempt for the most basic democratic principles.

But that violation will indeed be added, and then it will be seen that a sustainable economy cannot be built through centralized planning and a foundation of lies.

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