The European ‘New Marshall Plan’ – Challenges for Eastern Europe

By Radan Kanev

Even if the money for an ambitious post-COVID-19 EU recovery plan was on the table, the political elites in Eastern Europe lack the competence and the imagination to create sustainable prosperity, writes Radan Kanev.

Radan Kanev is an MEP from the Democratic Bulgaria coalition (EPP). The Bulgarian version of this opinion article was published with EURACTIV.bg.

The pressing challenges facing the EU as a whole are especially difficult for the East. They are linked to the health system, the social security system, which was never in good shape anyway, the economy as a whole, and certain crucial sectors such as tourism, and especially the typical mass summer tourism. The list is of course much longer.

But my take is that there are two much bigger challenges: first is the mentality challenge of the elite, and second, closely related, is the competence challenge.

Eastern European elites, and I will only use Bulgaria as a case-study, are severely unprepared to manage an ambitious recovery plan.

And whilst the ambitious MFF for which I have pleaded seems surprisingly near, while EU institutions and member states are closer to a consensus on a  comprehensive Recovery plan, including a significant Recovery fund, the reasonable and practical implementation of these funds in the countries of Central and Eastern Europe is hardly realistic…

What happens to the Bulgarian, European and in fact world economy now, requires – both from the economic and democratic-political point of view – a very strong governmental answer.

Almost any political thinker or macroeconomist today is pointing out that Big Government is striking back, at least as hard as Darth Vader’s imperial forces in Episode V of the Star Wars saga.

Moreover, it is not only that government is coming back as a mighty business player and employer of the last instance, whether we like it or not: it is that planned economy is having its long-awaited revenge over laissez-faire.

At least in the pharmaceutical sector, medical equipment, medicine and health-related industries generally, planned economy is a fact today, and it is here to stay…

We are discussing a Marshall plan for Europe or other New Deal concepts, thus contributing to a consensus on Keynesian Restoration in the macroeconomy. The Washington consensus was long suffering heavy underlying medical conditions and expected to pass away, due to old political age. Now it’s dead, and coronavirus infection is only the official cause of its death.

And here is the big problem of the Bulgarian government and political elite: We all lived and were formed as politicians in the heyday of the Washington consensus. Never in our lifetimes was Keynesian attempt even planned, let alone performed.

The last Big Government investment effort started when I was born in the mid-1970s and finished in shambles only ten years later. And the whole story of the Bulgarian transition is the story of alaissez-faire recovery from this failure.

We always struggled to reduce sovereign debt and never dared to think of an investment attempt on the markets. We got close to perfection in what Western Europe calls “Austerity”, and we call it… “Economy”. Our leaders, as well as our high-level administration and expert community, have no push-button for state expenditure in their mind. Either on mentality level or as practical competencies, we have no human resources to plan and perform a Recovery plan.

Let’s imagine the new Marshall plan is here, and the billions are on the table. What would a Bulgarian government do? Build a new nuclear power plant and start producing expensive and nowhere needed electricity?

Increase the pensions and spend the money in a few months? I have never heard of any other idea in the Bulgarian high political circles, indeed. It is not only a lack of competence, that hinders us, it is also a lack of imagination.

On the other hand, persisting problems with Rule of law and endemic corruption raise concerns that the Recovery plan will lead to corruption on an unprecedented scale and to the cementing of the incompetent and greedy local elites for another decade, at the expense of their own nation’s perspectives. But this is another sad story, worth another and longer article…

To conclude on a somehow optimistic note – there are at least two solutions, a short-term and a strategic one. The former is obvious, and yet nowhere to be seen – the Recovery funds should not be distributed to governments.

Local authorities, regions and businesses have far better capacity and higher integrity to perform the task, and smaller and more numerous loans and grants pose a significantly lower risk for mismanagement, corruption or simply priority misjudgment.

Strategically – the utmost challenge is new leadership, and a new generation of leaders, born long after the construction of the never-to-be-finished Belene nuclear power plant in Bulgaria started, both on high political, administrative and expert level. We’d find it easier to get the money needed for recovery than bright minds to invest it in sustainable prosperity.

Source: Euractiv.com

 

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