The Economist - UK (2022-05-28)

30 Europe TheEconomistMay28th 2022

white­collar jobs back home are often

pushedintolow­paidwork,saysMyrosla­

vaKerykofUkrainianHouse,a grouphelp­

ing Ukrainians in Poland. The war has

causeda shortageofworkersinsectorslike

industryandconstruction.Ofthe110,000

UkrainianlorrydriverswhoworkedinPo­

land beforethe war,some 40,000 have

gonehometofight.AtleastsomeUkrai­

nianwomenmayenduptakingupjobs

previouslyheldbyUkrainianmen.

ManyUkrainiansdonotwanttogettied

down,however,becausetheyhopetogo

backsoon,saysMrsKeryk.Only17%ofthe

refugeessaytheywanttosettleinPoland

for good,according to one survey.Less

thanhalfhaveenrolledtheirchildrenin

Polishschools.Theremaindercontinueto

study,remotely,atUkrainianones.Atleast

500,000Ukrainianshavenotappliedfora

Polishidentificationnumber.Thiswould

entitlethemtosocialassistance,including

amonthlyallowanceof 500 zlotys($114)

perchild,therighttoopena business,and

healthcare.

ButeventhoseheadingbacktoUkraine

acknowledgetheymayneedtoescapeRus­

sianbombsonceagain.“IknowI might

havetocomebackhereintwodays,”says

Natalia,a cosmetician,preparingtoboard

thetraintoUkraine.“Butwhoknows?”For

now,hopeseemstobeprevailingoverde­

spair.Ticketsfortheonlydirecttrainto

Kyivaresoldoutforthenextmonth.n

Going home

Ukrainian citizens crossing the border with Poland

’000

Source:PolishBorderGuard

30

25

20

15

10

5

0

May 2022

01 03 05 07 0    11 13 15 1718

From Poland to Ukraine

From Ukraine

to Poland

TheEU’scovid-19recoveryfund

So far, so good

T

he adagethat Europe is forged in crisis

may  be  about  to  acquire  a  refinement.

By the time a response to any given crisis is

operational,  which  takes  a  while  in  a  27­

country  bloc,  there  is  a  good  chance  that

the crisis will be more or less over. But the

response might well turn out to be just in

time for the next one.

Take  the  eu’s  covid­19  fund,  the  Next

Generation eu or ngeu for short. It was set

up in the second half of 2020 to help weak­

er  countries  in  eastern  and  southern  Eu­

rope  make  a  full  recovery  from  the  pan­

demic.  There  are  several  novel  elements.

For starters, it is big, at €807bn ($958bn) in

2021 prices, almost half of which is paid out

as  grants  (the  rest  as  cheap  loans).It  is

debt­funded  rather  than  coming  out  of

member states’ existing budgets, adding a

considerable  stimulus  (see  chart  on  next

page). And most of its money is to be paid

out only once countries have taken agreed

reform  steps  and  met  investment  targets,

rather than as a simple transfer from richer

to poorer regions.

This makes it a test of how the eu could

operate in the future. So far, even generally

hawkish  members,  such  as  the  Dutch  or

the  Germans,  are  uncharacteristically  up­

beat. The reform and investment plans are

substantive,  according  to  European  Com­

mission officials. Even in Poland the power

of money seems to work: difficult reforms

to  the  judicial  system  are  expected  to  be

built into the Polish programme, due to be

finalised  shortly.  Some  reforms,  such  as

the labour market ones enacted by Spain at

the  end  of  last  year,  are  already  showing

signs  of  success  in  generating  more  per­

manent jobs and fewer precarious ones.  

But many of the early milestones in the

plans are comparatively easy to pass; they

typically  include  such  things  as  opening

tenders  or  starting  legislative  processes.

Some of them are even retrospective: rele­

vant  projects  that  were  started  as  far  back

as  February  2020  can  be  included,  even  if

already completed. It is only when the im­

plementation gets harder, costs overrun or

governments  with  different  priorities

come  into  office  that  the  recovery  fund’s

governance will really be challenged. 

Italy may well become a test. Voters will

have  to  go  to  the  polls  some  time  in  the

spring of 2023, bringing to an end the gov­

ernment of national unity currently led by

Mario Draghi, whose core policy is the im­

plementation of the programme. The next

government  may  be  less  enthusiastic

about the plans. The disbursement sched­

ule  for  Italy  seems  to  expect  trouble:  the

three  biggest  chunks,  of  €11.5bn  each,  are

scheduled  to  be  paid  out  before  the  elec­

tion. The current impasse over a competi­

tion reform, held up on—of all things—the

liberalisation  of  bathing  establishments,

foreshadows  how  easily  reforms  can  get

stuck, in Italy and elsewhere. The commis­

sion  has  the  task  of  judging  compliance.

Like the southern European countries that

are getting most of the cash (see chart), the

commission has an interest in making the

recovery fund work, so as to act as a model

for future plans like it. Bend the rules too

much, though, and the support of the flin­

ty northerners will vanish.

Implementing  the  current  plan  is  only

part  of  it.  Another  issue  is  whether  the

fund can be adjusted to tackle today’s most

pressing issues: the war in Ukraine; the re­

sulting dash for alternative sources of en­

ergy to Russia; and inflation.

Start  with  the  last  of  those.  The  num­

ber­crunchers in Brussels had assumed 2%

inflation when drawing up the fund. With

annual price increases for many raw mate­

B RUSSELS

The fund has changed the way Europe spends money

Ursula von der Leyen’s huge plan