Talks at the marathon EU summit were arduous. In the end though, they resulted in a credible agreement. And that's what matters. In fact, the budget negotiations were lightening fast compared to other attempts to reach a compromise within the EU. There were only three months between the presentation of the draft recovery plan and Tuesday morning's resolution.
The term should not be used lightly but this deal really is historic. For the first time ever, the EU is taking on joint debt to soften the economic blow on member states. Just months ago, mutual funds and a debt union were unthinkable. Now, they are feasible. Germany's about-face from the frugal camp to throwing its weight behind French President Emmanuel Macron's concept of a unified budget policy and financial sovereignty made this historic step possible. This U-turn is perhaps German Chancellor Angela Merkel's greatest achievement in Europe.
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The effects of the pandemic have forced the 27 member states to work together in a way they could never have imagined until recently. Raising debts together is a welcome measure, as it places little burden on national budgets today. It is a loan secured against future generations. We have to be clear about that and be honest with young people. They will have to pick up the tab for this debt one day. On the other hand, this recovery package could now secure their apprenticeship or their job.
Times they are a-changing in the EU
The rapid success of the summit has shown the world that the EU is able to act when it matters, despite all the differences and disputes. The EU provides a unique, protective umbrella. Nowhere in the Americas, Asia or Africa do national states benefit from a supranational stimulus plan.
Even if the "frugal five" would have preferred to give less and the recipients would have preferred more, solidarity prevailed in the end. The €1.8 trillion ($2.1 trillion) package represents an enormous redistribution of wealth from the haves to the have-nots. This EU summit — a major success under Germany's presidency — will go down as a turning point in the history of the EU.
The only blemish was the failure to use financial leverage to rein in Poland and Hungary, who are facing EU legal proceedings. The mechanism linking the payment of funds to compliance with the rule of law is too soft. But that was the price to pay for not endangering the overall compromise. The solution to the problem of Poland and Hungary callously exploiting the solidarity of the others, will have to wait. The Brussels summit couldn't bridge all the gaps.