Making a success of the EU recovery plan: leaders debate the Central European perspective

The policy response to the pandemic has been hotly debated in EU capitals since spring 2020. A shared solution materialized into a rescue package five times larger than the Marshall Plan, with the aim of providing relief and increasing the resilience of EU economies. Will that be enough? Euronews discussed the question with senior politicians from Austria, Slovakia and the Czech Republic at the GlobSec 2021 conference in Bratislava.

Will it be enough?

Sasha Vakulina, Euronews: Let me start by asking you about the recovery and resilience facility. Of course, there's been so much debate over it. And do you think, Chancellor, let's start with you, do you think it will be enough to jump-start this recovery and the economies?

Sebastian Kurz, Chancellor of the Republic of Austria: I think that it will be enough. And I would also say it has to be enough. You know that we think that it was necessary to invest a lot of money to kick-start the economy. But we would have not agreed to a permanent debt union. And we do not want to repeat it several times. We think that it was a tool necessary at this time, but nothing that we should repeat quite often.

Sasha Vakulina, Euronews: Would you say that now there is less scepticism?

Sebastian Kurz, Chancellor of the Republic of Austria: Yes, there is less scepticism because we agreed on numbers. We agreed on a wider package, including rule of law and other criteria. We agreed that there should be a main focus on investment in digitalisation and also in the green economy, which makes our economies more resilient and also more powerful. And last but not least, we also agreed that it is a single tool and that it is not a permanent debt union, which was for us the most important point.

Sasha Vakulina, Euronews: Prime Minister Hagger. What's your take on that? Will it be enough? And what are some of the cornerstones of the national strategy in your case?

Eduard Heger, Prime Minister of the Slovak Republic: OK, if we want to invest a lot of money out of government pockets and increase debt, we have to have investments into, or linked with, reforms. So, because we know reforms are what bring healthy public finances, they must go hand in hand, in order to prevent further growth of debt: rather have instruments where debt could, later on, be decreased, by helping the economy to grow. So, therefore, pension reform, tax reform, education reform - it depends from country to country - but the element of reforms must be discussed, I think, every time we speak about this package of money. Because if we don't conduct the reforms, we’ll invest the money, but it won't have as much impact as it should.

Sasha Vakulina, Euronews: Deputy Prime Minister?

Karel Havlíček, Deputy Prime Minister of the Czech Republic: Even before the crisis, in the Czech Republic, we defined the new priorities. We completely changed the priorities at the level of the Czech Republic, and we've started to invest in research, development. To be no longer the land of stories, but a country for the future. We would like to present the Czech Republic and promote the Czech Republic no longer as a country of cheap beer, with beautiful countryside and the Charles Bridge, but as a country of knowledge, innovation, science and universities. And the recovery and resilience plan is based on this innovation strategy. And the question is whether it's enough. From our point of view, the amount is enough.

What about solidarity?

Sasha Vakulina, Euronews: We’ve received a few questions. And I would like to bring the first of those questions to our speakers. What are the visions of our speakers on how political solidarity across European societies will accompany the economic reforms that have already been highlighted? Prime Minister?

Eduard Heger, Prime Minister of the Slovak Republic: After the pandemic, we feel that the people are tired. They’ve been locked down, they've been going through a crisis. We had to help as governments. But we cannot forget in the general debate that there are other places in the world where we have to help. And I think solidarity in general, it's a word that we need to explain much more in general, even in local politics. What I see in the past, or over the past months or years, and I think it came with when we heard for the first time “the United States first”, is this, I would say, selfishness. And I think it's very, very dangerous for the developed world to become selfish.

Sebastian Kurz, Chancellor of the Republic of Austria: I totally share the vision of solidarity in the European Union and I think all member states can agree on that. What we sometimes forget within the EU is that we compete with other parts of the world, with China, with the US and many other countries. And if you look at economic growth rates, we have to avoid becoming a museum with a high standard of living. And I think we always have to repeat and remind ourselves that the basis for solidarity, the basis for public investments, the basis for higher social standards is competitiveness and economic growth. And if we look, for example, in the UK, of course, they had a very negative development last year, but this year they will have an economic growth rate of 7%, for example. If you look at China at the moment, there’s this enormous economic growth. So, I think what we should focus on is solidarity, definitely. But we always have to remind ourselves that solidarity is possible if we are all - all 27 member states - on their own and all united successfully.

Sasha Vakulina, Euronews: But how to find that balance? How to be successful and as much as possible competitive when it comes to the global stage, but also not to scale back that much on solidarity, when it comes to the EU bloc?

Karel Havlíček, Deputy Prime Minister of the Czech Republic: It works together: you’re doing great business, you can also meet your social responsibilities just the same. So, we have to balance it from the point of view of the sustainable environment. And from my point of view, there's great potential, great potential for cooperation between member states.

Sasha Vakulina, Euronews: I have another question from the audience, from Jamie Prentice. At least 37% of total spending must be allocated towards the green transition. With such strict guidance, how will it be possible to make sure the whole process doesn't become just a box-ticking exercise, in some cases, about making sure it's enough when it comes to the green transition?

Eduard Heger, Prime Minister of the Slovak Republic: I don't think it's box-ticking. Again, what’s important is what we invest in, within this framework. In some countries, it is well developed. So, it's going to be easy to spend this percentage. And actually, some of them will be even higher. In countries like Slovakia, where in certain parts, I said of Slovakia, we still got kind of stuck in time and weren't able to invest enough into getting out of the 20th century and into the 21st, we had to really rethink what we do and where do we spend it? But we went in the direction of decreasing emissions and we also went into schemes for houses, where we know that a lot of families are in bad housing conditions, houses with bad energy consumption. So that's where we put a lot of this money, into these schemes, because they decrease emissions. It also helps with energy usage. So, yes, I don't see this as box-ticking.

Different priorities in different countries

Sasha Vakulina, Euronews: The European Parliament had a survey showing Europeans want the EU to spend and invest more in health. Of course, this is something we all understand, having been through the pandemic. When it comes to Austria, most of the people said: climate change and environmental protection. When it comes to the Czech Republic: economic recovery and new opportunities for businesses. When it comes to Slovakia: employment and social affairs. Would you comment on the results from your countries?

Sebastian Kurz, Chancellor of the Republic of Austria: I didn't know that, but it sounds good because it's what we’re doing, so, I'm happy if people are happy. We are investing more than 40% of it in green transformation and a bit more than 40% in digitalisation. So, that sounds quite OK. But I think for many people, this whole thing is still quite abstract. And so probably I'm not sure if there's really such a big gap between the member states, but I don't know the figures.

Sasha Vakulina, Euronews: Thank you.

Karel Havlíček, Deputy Prime Minister of the Czech Republic: As you know the Czech Republic has a quite specific economic environment and economic structure; especially from the point of view of the energy sector, 60% of central heating systems are based on coal; 45% of electricity is based on coal. That means that we have now to transfer all of these sources into low emission sources. It's an extremely difficult path we are starting on now. And of course, the future is in renewables, but also nuclear energy. And at the same time, we need support from the European Union. I guess, well, in the next maybe, let's say 10... 15... 15 years. It’s the same in the industrial segment. We are one of the most industrialised countries in Europe, in the top three. And that means that we have to completely change the industrial segment and industrial infrastructure to low emission technology as well. And it’s the same for transport. 20% of the emissions in the Czech Republic come from the transport sector.

Sasha Vakulina, Euronews: Prime Minister?

Eduard Heger, Prime Minister of the Slovak Republic: We’re making investments in hospitals, in healthcare, because we know that there’s a big gap. And I think this is one of the reasons why the survey came out as it did. But also, a big amount of money is going towards innovation and reform. Plus, over €600 million is going into innovation, because this is where we see the future. We are a very industrial country, automotive as we know, and we want to develop and build on this backbone of our economy into investments, into innovations. And I see this in other countries around us as well. So, it's a good foundation for future cooperation, which I very much look forward to. And these are great neighbours and friends as well. So that's why, even despite all this disarray, we had to invest in the future, which is very important for Slovakia.

Restoring faith in national leadership

Sasha Vakulina, Euronews: I've got another survey for you. According to the recent Eurobarometer results, 43% of Europeans are satisfied with measures taken so far by national governments to fight the pandemic, 43%. That sounds good. Could it be better? Of course, it could be. My question is how to make sure that these funds... how to use these funds to increase confidence and increase trust towards national governments from citizens?

Sebastian Kurz, Chancellor of the Republic of Austria: I can only speak for our country. But of course, the pandemic hit us hard. Of course, it was terrible to see how many people lost their jobs. About 15% of our GDP is dependent on tourism. This was terrible for many regions of Austria. And now even these sectors are coming back. Tourism is coming back. People are getting back into their jobs. So, I think we will have a very positive development over the next months and years. And the whole recovery fund is still in the planning status. So, spending this money will help even more.

Sasha Vakulina, Euronews: Thank you. Prime Minister?

Eduard Heger, Prime Minister of the Slovak Republic: 43%. Is it good? Is it bad? Well, that's what it is. It should be better.

Sasha Vakulina, Euronews: It's about the glass that’s half full...

Eduard Heger, Prime Minister of the Slovak Republic: Yes, exactly. So, the important thing is that we don't stop. We haven't. As I said, we've not finished. We are still thinking about how to live with Covid for the upcoming period. Vaccination is very important. And we know that we'll have to vaccinate the whole world if we really want to get rid of Covid. But definitely, at the level where we are now, we will have a much better quality of life in Europe. So, definitely, let's move forward and don't give up and don't relax.

Audience Question: My question is about conditionalities. Are they only about structural reforms or should there be - because the EU also has a normative force in the world - conditionalities related to the rule of law when it comes to having an independent judiciary, a free press, non-discrimination, LGBT rights, etc. What's your take on this?

Sebastian Kurz, Chancellor of the Republic of Austria: I share that it was a big debate and also one of the points we as the frugal countries brought into the debate. The rule of law has to be a basis if one member of the European Union wants to get a lot of money from other member states, which have to pay for that. And, of course, as always, in the E.U., we had to find a compromise. So, a bit more would have been good. But at least we agreed to something on the rule of law.

Eduard Heger, Prime Minister of the Slovak Republic: I don't really see a reason for having such a condition in the conditions. On the other hand, we are a European Union, as I said, one of the best places to live. It's a democratic environment. And for us, the rule of law is of top importance, because no democracy can grow in an environment other than one in which the rule of law is fully active. Therefore, I think this is the base position. And if we see that there are some other views on it, it's definitely good to have a debate on it and try to understand what’s behind it. But we have to also understand that the European Union is a union of autonomous countries with their sovereignty. But for Slovakia, as you see, in the current situation, the rule of law is really something that we want to build into Slovakia. We want to make Slovakia a solid democratic country with strong roots in the rule of law.

Karel Havlíček, Deputy Prime Minister of the Czech Republic: So, we have an opportunity, a great opportunity to manage the plan as a European plan, not only as a plan of a particular country as well, and that the power of this initiative of this plan... It's like in business. In a balance sheet, you know, on the left side there are the assets and on the right side, equity and liabilities.

An asymmetric pandemic

Audience Question: My name is Yana, I’m a professor at the University of California. So, we heard a lot about the environment and innovation, but I'd like to hear more about your plans to address regional disparities, increasing wealth and income inequality and sectoral inequalities. We know that some sectors were winners during the pandemic: the pharma industry... and other sectors were losers. So, if you can tell me a little bit about your plans to address these issues.

Sasha Vakulina, Euronews: Prime Minister, if you want to start...

Eduard Heger, Prime Minister of the Slovak Republic: The question of the winners and the losers. Yes, this whole pandemic was definitely very asymmetric. Slovakia is a country of industry and that helped us a lot, really, to not have such bad numbers. In the beginning, we expected that we were going to have a decrease in GDP of almost 10%, and it ended up not even 5%. When you speak about regional disparities, well, this is the challenge. I mean, honestly, I don't think there is a short answer to it. And I don't think there is a short solution to it. We’ve had them in Slovakia for 20 years and every government has been fighting against them. And at the end of the 20 years period, we realised they’re even bigger. So, I think infrastructure, definitely education, and investments across the country, and really look to specialization. I think that's very important as well. And to go hand in hand and step by step.

Sebastian Kurz, Chancellor of the Republic of Austria: The winners of the crisis? I would say the digital companies and tech companies are definitely amongst the winners. And I think we should also find a way on the European level, or beyond, for better taxation of these companies. And, of course, what we would also try to do is to bring as many people as possible back into jobs. So, we are investing €700 million in a small country of nine million people in upskilling programmes, especially focused on the long-term unemployed, to bring them into jobs again.

Karel Havlíček, Deputy Prime Minister of the Czech Republic: You are evaluating the unemployment rate, especially in the Central European countries. Well in the Czech Republic, it's extremely low. I know. And the losers, of course: retailers and small services. And that's the reason why we support this sector with a lot of resources. We support that segment of the small and medium enterprises, especially in business areas like services, restaurants and small retailers. But we have to finish this support now and to start a new type of support: based on investment, support based on innovation, support based on, let's say, programmes such as loan guarantees and banking loans and finally we have to balance and manage the labour market as well.

Sasha Vakulina, Euronews: Thank you so much. Thanks to all the speakers for this session, thanks to everybody participating here. Thank You.