The storm of exploitation of the "Corona Fund" encircles Madrid
Accounting reports issued by Spain's budget supervisory body earlier this month revealed that Pedro Sánchez's government has deployed funds linked to the "Corona Recovery Facility", the "European Economic Plan Partially financed through Common Debt" to cover part of Spain's pension payments in October 2024.
The revelation sparked a Spanish-European political storm, bringing to the fore the narrative of the "austerity of the European North against the weaker South" and putting Madrid in the eye of the cannon ahead of the difficult European budget negotiations.
Spanish government denial
The Spanish government has denied misusing "one euro" of European funds, saying the matter is "purely accounting" and politically employed by the opposition in a "baseless way".
Although sources in Madrid confirmed that the file was closed with Brussels after providing clarifications to European negotiators, the political damage has already been done: the opposition Spanish People's Party demanded that Sanchez appear before parliament, while conservative lawmakers in the European Parliament launched a scathing attack, with Czech MP Tomáš Zdijchowski calling the incident a serious misuse of taxpayers' money, while Dutch Dirk Guttink asserted that the use of 10 billion euros in secret to pay pensions is the embodiment of the worst. The North's fears of these boxes.
The "fiscal framework" and the fate of common debt
Brussels is poised to launch difficult negotiations on the next "multi-year fiscal framework" for the period 2028-2034, and Spain, which has received €60 billion as the second largest beneficiary of the €750 billion European Recovery Fund, is one of the most vocal advocates for the transformation of the pooled borrowing mechanism into a permanent instrument.
Spanish Finance Minister Carlos Cuerbo is leading a French-backed front to create a safe assets mechanism that would benefit from the European Commission's excellent credit rating, generating annual savings of up to €25 billion for all members.
French President Emmanuel Macron called the North's calls for early payments "stupid" and called for an extension of the debt of the Corona pandemic, while German Chancellor Friedrich Merz reiterated his country's strong opposition to the engineering of the common debt, coinciding with the Netherlands' adherence to strict payment schedules and spending cuts.
Employing the Financial Problem
In light of the Spanish government's inability to approve a budget for 2025 and rely on an extension of the 2023 budget, European officials consider that the issue of Spanish pensions is no longer just aimed at injuring Madrid, but is being branded as a lethal "political weapon" in the hands of Nordic countries to accept the proposal to extend the debt during the crucial EU summit expected next June.