Financial transaction

To defeat Putin, we must protect Europeans from the shockwaves of war –

The Russian war against Ukraine will inevitably result in a serious economic shock of uncertain magnitude in the European Union. Rapid increases in food and energy prices affect the most vulnerable Europeans, worsening energy poverty and living conditions.

MEPs Pedro Marques and Biljana Borzan are S&D vice-presidents. MEPs Agnes Jongerius and Jonas Fernandez are S&D MEPs and the main negotiators on the resolution.

The economic forecasts presented by the European Commission in May clearly illustrate the negative impact of the war on our economy: growth slows considerably and inflation reaches record levels not seen since the introduction of the single currency.

This grim picture calls for immediate action. We Socialists and Democrats, who have long fought for a fairer Europe, are now determined to take the lead in efforts to protect European citizens, especially the most vulnerable, from the shock waves of war.

We owe it to the Ukrainians. If we don’t stay strong and united, we won’t be able to help them. We owe it to our fellow citizens, because we promised them to defend our values. The lack of a European response to the recent financial and migration crises has taught us a painful lesson: only populists and destructive forces profit from EU inaction.

The European Parliament resolution, adopted in May, is the first step, with several concrete objectives and ideas. We will strive to achieve them. We call on the European Commission and EU Member States to take them into account immediately and make them a clear priority.

The Commission has so far chosen to talk about sanctions and the reconstruction of Ukraine. These are very important priorities, but to retain the support of Europeans, carry these priorities and prevent the rise of populism, we must protect populations from the repercussions of war.

Maintaining the flexibility of European fiscal rules

The first thing to do is to maintain maximum flexibility in European budgetary rules for as long as necessary to allow an effective response to changing economic conditions. This is made possible thanks to the “general derogation clause”, which makes it possible to derogate from European budgetary rules in the event of a major economic slowdown.

The EU introduced the general escape clause with the 2011 budget reform in response to the financial crisis, but only activated it in March 2020 to allow governments to respond to the Covid-19 pandemic.

Now as then, Europe is experiencing a severe economic downturn and facing great uncertainties, so the need to extend the general escape clause throughout 2023 is clear.

The Commission took the right decision in proposing a one-year extension of this clause, but the mere fact that some Commissioners have been reluctant to do so is a signal that not everyone has learned the lessons of the failed policies adopted in response to the financial crisis, nor the bonds that kept our economies afloat during the Covid crisis.

Putting in place a new social resilience package to help European citizens and refugees

Our group also worked hard to include a call for a temporary EU social resilience package, with targeted support for the most vulnerable Europeans by summer 2022.

This set of initiatives includes the extension and strengthening of the SURE instrument, designed as a response to the coronavirus pandemic to protect jobs. We are also asking for additional funding for the European Child Guarantee to ensure support for Ukrainian children and help in welcoming and integrating refugees into our societies.

To have a meaningful debate on all these initiatives, we need to organize a new social summit to build on that of Porto last year, to agree on new concrete actions and to really fulfill the ambitious objectives that we defined then. This is an unprecedented situation that calls for unprecedented measures.

More money needed – windfall tax an option

To finance these necessary and unprecedented measures, it is not enough to reallocate existing funds such as the unspent 200 billion euros of loans provided for in the recovery and resilience fund. We need more money.

The Bruegel Institute estimates that for every million refugees, we need 10 billion euros a year to support them and guarantee them decent living conditions, such as access to housing, education and the market. work.

We suggest two possible new sources for the European budget: the financial transaction tax, which has been talked about for a long time, and a windfall tax, which sets higher tax rates for the windfall profits of large multinationals, in particularly in the energy sector.

It is unacceptable that the poor cannot afford to heat their homes while the wealthy corporations reap enormous profits thanks to surprisingly favorable circumstances, such as the current high energy prices.

Based on the Italian experience, where the government expects to raise around €11 billion this year through a windfall tax of 25%, the EU could raise €90-100 billion in 2022 .

This would not only allow it to finance the extraordinary measures that Europe needs to deal with the economic and social consequences of the war, but it would also restore some basic social justice. This is essential if we want to avoid the rise of populism and maintain popular support for solidarity with Ukraine.

In conclusion, the European Parliament, led by Socialists and Democrats, proposes a social, solid and realistic package to deal with the difficult situation facing the EU economy following the criminal invasion of the Ukraine by Putin. Now is the time for the Commission and the Council to act.