New crisis, new coalitions, new financial ambitions: How bargaining dynamics change in crisis situations and create unprecedented paths of budgetary developments

When the long-lasting negotiations on the new Multiannual Financial Framework (MFF) 2021-2027 of the European Union (EU) were in their final round, the COVID-19 pandemic broke out and posed an unprecedented challenge not only to public health services, but also to society as a whole, the economy as well as politicians on all governmental levels from local to European. On that basis, the European Commission reacted by putting forward a new proposal for the MFF, which included substantial adjustments to former structures. The following negotiations resulted in new coalitions and bargaining positions, readjusting former but also producing new negotiation logjams. Particularly the Franco-German proposal and the backlash of the so-called ‘Frugal Four’ coalition determined the bargaining agenda on financial facilities. With the EU Recovery and Resilience Facility ‘Next Generation EU’, Member States not only agreed to include debt-financed grants instead of limiting the package to loans. Furthermore, they coupled the recovery fund to the MFF. This constituted a striking move, since that approach was vehemently rejected during the eurozone crisis in order to prevent a reallocation of such considerable funds during future internal negotiations. Only recently, the upcoming discussion on a further expansion of debt-financed financial EU-instruments to combat the energy crisis reinforce the impression of a new, formerly unthinkable path of EU budgetary politics paving its way into the core European institutional architecture. This paper assesses the negotiation processes on the MFF 2021-2027 during the year 2020 under the pressure of the COVID-19 pandemic situation and evaluates their results compared to the eurozone crisis management as well as the current discussion on the energy crisis. We argue that the connection drawn between the MFF and financial instruments to overcome the economic crisis triggered by the Covid-19 pandemic in 2020 was a strategic move allowing for stronger ties between the Member States in budgetary policies. The final round of negotiations on the new MFF collided with the outbreak of the Corona crisis and furthermore coincided with crisis-related modifications of bargaining and power positions of member states. This might have opened up a window of opportunity to enhance a new path of European integration. By comparing the bargaining situations in the different crises, we evaluate positions, partners, power relations and bargaining results with the intention to clarify, if the current developments were already triggered by the eurozone crisis or if we must see the Corona crisis as a critical juncture. Following our analysis, there is (i) a continuity in intergovernmental control on negotiation processes but at the same time (ii) substantial change regarding bargaining situations and as a result (iii) new forms of EU budget financial instruments with an unprecedented level of risk-sharing and liabilities. We situate this finding within the theory of new intergovernmentalism, while considering also theoretic classifications of former eurozone crisis response instruments.