The European Commission has revealed that it will unveil a plan to implement the so-called “Covid-19” structural funds in the coming weeks. While no date has been set for its unveiling, it will most likely coincide with the expiration of the existing funds in late September.
As the “Covid-19” structural funds have not yet been formally launched, the news release announcing their intent is seen as the start of preparations for the launch itself. Additionally, the use of this fund by the European Commission should bring an end to the uncertainty surrounding the introduction of these funds.
The existing Euro Area funds, which were introduced to help the poorer areas of the union, have come under attack from the likes of France, Italy and Spain. They fear that the funds will unfairly benefit members of the eurozone by encouraging irresponsible behavior. Meanwhile, member states have criticised these funds for their inability to boost economic growth or create jobs.
The creation of the “Covid-19” structural funds was supposed to resolve the differences between the different members of the union. However, as a result of Spain’s refusal to fund the funds, other nations like Greece and Portugal decided to launch their own recovery funds to replace the former one.
The reason why there are multiple recovery funds in the euro area is due to the various negative consequences of a failing economy. Financial institutions and countries are expecting to invest in areas such as growth, employment and debt management in order to help revive the condition of the weaker areas of the union.
With regards to Spain, the Spanish government is believed to oppose the creation of the funds since it believes that they would be better spent on its welfare and aid to its southern neighbor, South American nation, Argentina. Instead, Spain is expected to spend money on its own national budget.
To date, no investment has been made on the three structural funds announced by the commission. The commission aims to generate the funds using various methodologies.
For example, the commission wants member states to make investments in areas such as infrastructure, health care and education in order to improve the condition of the European Union. Additionally, it will also look to implement minimum standards to create greater efficiency in the implementation of the recovery funds.
The eurozone is currently in a depression and the need for further financial assistance is becoming more important with each passing day. Any decision to abandon the existing funding system would be met with pushback from the more powerful nations in the region.
Meanwhile, a southern European nation may take advantage of the crisis and launch its own recovery funds in order to strengthen its position within the eurozone. The government in Argentina had already initiated efforts to launch its own funds and one can assume that a similar move by another South American nation will follow.
Currently, no nation has gone as far as to introduce its own funds and it seems that a banking crisis will be felt in Europe for some time to come. However, the Spanish government has made it clear that if they feel that the funds are no longer necessary, they will pull out of the Euro Area altogether.
It is impossible to say what the future holds in terms of a eurozone collapse, however, the situation does appear to be worsening. The commission should give it the tools it needs to handle the situation as quickly as possible, and so far, the Euro Area has not provided it with the flexibility it needed.