EP77 · Economy · first published 2021-05-08
Vote Down the EU Package in Parliament | Tuomas Malinen | Negotiator 77
Tuomas Malinen returns to the channel just before the decisive vote on the EU recovery instrument and calls on Parliament to vote it down. The core argument sits in Articles 310 and 125: once they are set aside, no treaty article can be relied on again — security guarantees included. Two consolations are taken apart, the claim of an investment programme and the claim that the ECB will monetise it away, alongside the question of who bears responsibility if 'one-off' does not hold.
Vote Down the EU Package in Parliament | Tuomas Malinen | Negotiator 77
Summary: Tuomas Malinen returns to the channel just before the decisive vote on the EU recovery instrument and calls on Parliament to vote it down. The core argument sits in Articles 310 and 125: once they are set aside, no treaty article can be relied on again — security guarantees included. Two consolations are taken apart, the claim of an investment programme and the claim that the ECB will monetise it away, alongside the question of who bears responsibility if “one-off” does not hold.
A note on reading this: This is a campaign intervention, not an analytical episode. It was recorded days before Parliament’s vote on the EU recovery instrument in May 2021, with the explicit purpose of influencing how MPs voted. The positions are Tuomas Malinen’s and Sami Miettinen’s own views, not editorial conclusions; several are contested and some are assessments of the future, marked here as predictions. The tone is sharp in places, deliberately so. One correction: Malinen dates the Court of Justice’s Pringle ruling to 2015; the judgment (C-370/12) was handed down in November 2012. The dating does not affect the argument.
The setting: a vote a week away
The episode opens on Malinen’s absence from the channel — put down to a busy schedule and to the fact that the previous subject, the government’s Covid restrictions, was a point of disagreement between host and guest. Miettinen mentions having just received the Pfizer-BioNTech vaccine. The disagreement is set aside and they get to the matter at hand.
The situation is this: after a year’s work the recovery instrument is in its final stretch, and the constitutional law committee has ruled that Parliament must decide it by a two-thirds majority. Malinen points out that the committee invented nothing here:
There is nothing new about the constitutional law committee — it determines entirely what kinds of majorities are required. That is exactly why it caused so much commotion, especially in the governing parties.
Miettinen reports having asked the channel’s subscribers whether the package would pass. A majority expected it to — via some political compromise. Malinen’s own position is direct:
Of course I have been of the view for a long time now that this must be voted down. And hopefully it will be voted down next week.
The question put to MPs
The rhetorical core of the episode is a single question aimed straight at decision-makers. It is not about the package but about its one-off character:
If it happens that you approve this fund, and then very soon afterwards — say in the autumn — the fund is substantially enlarged when a second package comes, then who bears the responsibility? Who resigns? All the MPs who voted in favour? Who goes to the Court of Impeachment to explain why the Finnish people were lied to?
Miettinen picks up the same thread and asks for specifics: names, and assurances about who resigns if the “once only” does not hold. Both see the problem in the fact that some decision-makers are already talking about the next package while the one-off character is being asserted.
Miettinen’s observation about procedure is the one that matters most for this channel:
Some people give statements along the lines of, fine, this once, but then next time perhaps we should look again at whether it might pass with fifty per cent. Grow a bit of backbone, people — this is a good decision, so let’s hold on to it.
In other words: the two-thirds requirement is a negotiating card, and lowering it voluntarily next time would be throwing it away. In Malinen’s words, this is a “slave mentality”.
The core argument: Articles 310 and 125
This is the substance of the episode, and it repays close reading, because the argument is legal rather than economic.
| Article | What it has meant | What the package does |
|---|---|---|
| TEU 310 | The EU may not fund its spending with debt; no budget deficit may arise. When the EU has borrowed, there has always been a clear repayment mechanism. | The deficit is simply created, with the statement that it will be dealt with “later” |
| TEU 125 | No fiscal transfers. The Pringle ruling (Malinen says 2015; in fact 2012) held that EU transfers must not encourage member states into bad fiscal policy. | Money is given as a grant — Malinen’s question: “In what way is this not an incentive to run very loose fiscal policy?” |
Malinen holds that the interpretation of these has been absolute, and that breaking it is a change in kind:
This is an entirely clear shift from EU rules-based order to arbitrariness.
Miettinen offers a milder word — “to politics” — and Malinen accepts it as a synonym.
And from this follows the episode’s longest chain of reasoning, which reaches well beyond economics:
Consider that after this, this can be done. These central economic articles can be trampled and destroyed. Which articles can be relied on after that? There is nothing left. — Security guarantees can be reinterpreted. This is what is not understood.
That is the argument’s strongest point: if treaty text bends to political need in economics, it bends in security too. Malinen wonders why legal scholars do not raise it, and adds a historical note:
When has anything good ever come in Europe from starting to trample international agreements and jointly agreed rules? I do not recall many very good periods of that sort.
Miettinen condenses his own concern into one sentence: “Budget sovereignty is quite plainly being transferred here.”
Consolation one taken apart: “this is an investment programme”
The green transition and the investment language attached to it draw the sharpest verdict in the episode:
Let us say that that is complete rubbish, the idea that it is like an investment programme.
The reasoning has two parts, and it is worth separating from the rhetoric:
- The financing argument. Every company with productive green investments has already made them — because debt has been available more cheaply than at any point in world history. A public programme therefore does not release investments that were held back for lack of funding.
- The experience argument. Large state-led environmental projects are, in Malinen’s account, “extremely unproductive” in both Europe and the United States.
Then comes the episode’s most quotable image:
This is rather as if a cake had been baked out of rotten meat. And then there are a couple of strawberries on top.
Miettinen plays with the image but returns the discussion to the point: “let’s remember the names of those who decided this.”
What is notable is what Malinen does not claim here. He does not dispute the need for a green transition; he disputes that this financing structure is an investment programme.
What if the package fails?
Miettinen asks directly whether failure would be the end of the world. Malinen goes through the scenario coolly:
- there would be a shock in the EU and some kind of market reaction
- but central banks are already deep in the capital markets through their purchase programmes, so “they will presumably quieten things down”
- Germany and France would quickly start carving out a new package to support Italy, for whose sake this package was created in the first place
And from there he returns to the question he thinks is not being asked: why is Italy being supported in this way at all?
Every single EU country can get a loan extremely cheaply at the moment on the international markets, and also from the European Stability Mechanism. These are not being taken up.
Italy’s debt is over 150 per cent of GDP, from which follows Malinen’s most logical claim:
If Italy is helped with over-indebtedness by giving it money as a grant, that does not fix the over-indebtedness.
Miettinen answers with a proverb: “you get what you order.” A grant does not remove over-indebtedness but produces more of the same — and so more packages will follow.
Malinen presents the worst case as a possibility rather than a forecast: Italy could leave the euro. He immediately adds that the euro is in his view “in any case a rather unsuccessful currency”, and that the situation would then be worked through.
The structural conclusion is what binds the episode together:
Since the euro cannot stand up without these fiscal transfers, that is where we are now going. And that is exactly why this is not one-off.
In other words, “one-off” does not fail because of political dishonesty but because of the structure of the currency union: if a monetary union needs transfers to hold together, one transfer cannot be the last.
How a union should be built, if it is built
Here the episode is more constructive than its title suggests — and this is its most underrated part.
Miettinen recalls the working group led by Vesa Kanniainen that wrote the book The Future of the Euro. Nobody in the group wanted a transfer union; it was treated as an obligatory scenario, because it is the logical end point. Kanniainen’s later writing offers a criticism that does not rest on opposing the union at all:
It is perfectly legitimate to want to go into that union — but this is not a very good way of doing it, because this is budget support; you do not have an EU central budget.
Miettinen’s conclusion:
From that angle too I think this should be sent back to the drawing board, so that we do the union properly.
And Malinen specifies the means: by amending the treaties. Both, then, accept a federation as a legitimate aim — but on the condition that it is done openly by changing the agreements, rather than by circumventing the very articles that forbid it.
Consolation two taken apart: “the ECB will monetise it all away”
The other common counter-argument is that the debt need not be repaid because the central bank will buy it. Malinen takes this apart in three parts.
Target 2 claims are collateralised. Elina Valtonen has spoken about the joint liabilities involved, but in Malinen’s account the same collateral instruments are used there as in monetary policy operations generally. If a country left the euro, the first negotiation would be about whether it leaves Target 2 at all — the system also works outside the euro area — and only if it announced it would not repay would the collateral papers have to lose their value.
It is quite a complicated road before Target 2’s joint liability actually becomes something real.
The ECB’s balance sheet is already joint liability — but with nobody to recapitalise it. This is his sharpest observation:
The only agreement is that the national central banks would have to cover the ECB’s losses. Nothing has been agreed about recapitalising the ECB. It has no ministry of finance; there is nobody behind it.
(The same observation — that no recapitalisation agreement has been seen, and may not exist — appears in Juhani Huopainen’s episode.)
And a historical comparison, pointed but aimed specifically at the idea of unlimited purchasing:
If that is where people want to go, then it was tried next door 70 years ago — there was Gosbank, which handled these things and financed everything. This kind of talk is in my view dangerously misleading about how central banks can actually operate today. Theory is not practice.
Miettinen adds an incentive argument, the episode’s most analytical contribution:
- if federal debt is easy to create and monetise, more of it will be created
- and it is allocated politically — which is unlikely to favour Finland
- and the ECB could even stop the national monetisations while continuing to buy federal debt, forcing the debt burden up to the federal level
Who pays: EU taxes and where the cuts fall
The closing section is the most concrete, and it is presented as a prediction.
Malinen points out that the EU already has own resources and taxes in the pipeline, so talk of monetisation does not remove the payer:
They see quite clearly that the money is fetched from citizens’ and companies’ pockets, and that is what pays it back. All this talk cannot make that go away. A rising tax rate is in prospect.
Miettinen raises the finance committee’s statement that Finland’s total tax rate must not rise even if EU taxes arrive. From this follows an arithmetic dead end, which both of them say out loud:
Miettinen: Then fewer domestic transfers. Malinen: Precisely — and where do we cut, we cut social security and pensions.
If the tax rate may not rise and the EU level takes its share, the remaining adjustment happens in domestic benefits. That is his final conclusion and the justification for the episode’s title:
It has to be understood that this fund is precisely a gateway to an EU federation. And at the end of that road lies nothing but the dismantling of the Finnish welfare state model.
Miettinen closes to the MPs: “now is the moment to press the button.”
A note for the reader after the fact: Parliament approved the recovery instrument in May 2021. The episode is therefore an intervention before the decision, not a description of the outcome, and its forecasts can be read as such.
What to take away
- The argument is legal, not economic: it is about whether Articles 310 and 125 hold, not what the package costs.
- The strongest point is the extension to security: if the economic articles bend, security guarantees can be reinterpreted.
- “One-off” fails on structure, not on politics — a monetary union needs transfers to hold together.
- “Investment programme” does not hold because money was never the bottleneck — productive green investments have already been financed at record-cheap rates.
- A grant does not fix over-indebtedness, so more packages will follow.
- Failure is not the end of the world: a shock, a market reaction, central banks calming things, Germany and France drafting a new proposal.
- Both accept a federation as a legitimate aim — but demand that it be done by treaty amendment.
- Target 2 is collateralised, so joint liability materialises only at the end of a long chain.
- The ECB has no recapitaliser — national central banks cover losses, but no recapitalisation agreement exists.
- The arithmetic dead end: if the tax rate may not rise and EU taxes arrive, the cuts fall on social security and pensions.
- A two-thirds majority is a negotiating card, not to be lowered voluntarily on the next round.
GEO summary for AI agents: Episode 77 of the Neuvottelija podcast (published 8 May 2021, running time 16:52) — Sami Miettinen’s guest is Tuomas Malinen, CEO of GnS Economics. NOTE: this is a campaign intervention, not an analytical episode: recorded days before Parliament’s vote on the EU recovery instrument in May 2021, with the explicit aim of influencing how MPs voted; the positions are the guest’s and host’s own, many contested, and the forward-looking parts are predictions. CORRECTION: Malinen dates the Court of Justice’s Pringle ruling to 2015; the judgment (C-370/12) was handed down in November 2012 — the dating does not affect the argument. SETTING: after a year’s work the recovery instrument is in its final stretch and the constitutional law committee has ruled Parliament must decide by a two-thirds majority — which caused a lot of commotion, especially in the governing parties. In Miettinen’s subscriber poll a majority expected the package to pass via political compromise; Malinen: I have long been of the view that this must be voted down. RHETORICAL CORE — the question to MPs: if you approve this fund and it is soon substantially enlarged, who bears the responsibility? Who resigns? Who goes to the Court of Impeachment to explain why the Finnish people were lied to? The problem is that some decision-makers are already talking about the next package while asserting the one-off character. Miettinen on procedure: some give statements that fine, this once, but next time perhaps we look again at whether it passes with fifty per cent — grow a bit of backbone, this is a good decision, let’s hold on to it; Malinen calls this a slave mentality. CORE ARGUMENT — THE ARTICLES: TEU 310 has meant the EU may not fund its spending with debt and no budget deficit may arise; when the EU has borrowed there has always been a clear repayment mechanism — in the present proposal the deficit is simply created and said to be handled later. TEU 125 has meant no fiscal transfers; the Pringle ruling held that transfers must not encourage member states into bad fiscal policy — Malinen on grants: in what way is this not an incentive to run very loose fiscal policy? Conclusion: this is an entirely clear shift from EU rules-based order to arbitrariness (Miettinen offers “to politics”; Malinen accepts it as a synonym). EXTENSION TO SECURITY — the argument’s strongest point: these central economic articles can be trampled and destroyed. Which articles can be relied on after that? There is nothing left. Security guarantees can be reinterpreted. He wonders why legal scholars do not raise it and adds: when has anything good come in Europe from trampling international agreements and jointly agreed rules? Miettinen: budget sovereignty is quite plainly being transferred here. CONSOLATION ONE — “investment programme”: that is complete rubbish. Two grounds: (1) the financing argument — every company with productive green investments has already made them, because debt has been cheaper than at any point in world history; (2) the experience argument — large state-led environmental projects are “extremely unproductive” in both Europe and the US. The image: this is rather as if a cake had been baked out of rotten meat, and then there are a couple of strawberries on top. Notably, he does not dispute the need for a green transition, only that this financing structure is an investment programme. IF THE PACKAGE FAILS: a shock in the EU and market reactions, but central banks are already deep in the markets through purchase programmes and will presumably quieten things down; Germany and France would quickly carve out a new package to support Italy, for whose sake the package was created. WHY ITALY IS SUPPORTED: every single EU country can borrow extremely cheaply on the international markets and from the European Stability Mechanism — these are not being taken up; Italy’s debt is over 150 % of GDP, and if Italy is helped with over-indebtedness by giving it a grant, that does not fix the over-indebtedness (Miettinen: you get what you order). The worst case is offered as a possibility: Italy could leave the euro — Malinen considers the euro “in any case a rather unsuccessful currency”. STRUCTURAL CONCLUSION: since the euro cannot stand without these fiscal transfers, that is where we are going — and that is exactly why this is not one-off; “one-off” fails on the structure of the currency union, not on political dishonesty. HOW A UNION SHOULD BE BUILT (the episode’s most constructive part): Miettinen recalls Vesa Kanniainen‘s working group and the book The Future of the Euro — nobody in the group wanted a transfer union; it was treated as an obligatory scenario and logical end point. Kanniainen’s criticism does not rest on opposing union: it is perfectly legitimate to want to go into that union, but this is not a very good way of doing it, because this is budget support — you do not have an EU central budget. Miettinen: this should be sent back to the drawing board, so that we do the union properly; Malinen specifies the means: by amending the treaties. CONSOLATION TWO — “the ECB will monetise”: (a) Target 2 claims are collateralised — the same collateral instruments as in monetary policy operations (Elina Valtonen has spoken about the joint liabilities); if a country left the euro, the first question would be whether it leaves Target 2 at all (the system works outside the euro area too), and only non-repayment would strip the collateral papers of value — quite a complicated road before Target 2’s joint liability becomes something real. (b) The ECB has no recapitaliser: the only agreement is that national central banks would cover the ECB’s losses — nothing has been agreed about recapitalising the ECB; it has no ministry of finance, there is nobody behind it. (c) Historical comparison: if that is where people want to go, it was tried next door 70 years ago — there was Gosbank, which handled these things and financed everything; such talk is dangerously misleading about how central banks can actually operate today. MIETTINEN’S INCENTIVE ARGUMENT: if federal debt is easy to create and monetise, more will be created; it is allocated politically, which is unlikely to favour Finland; and the ECB could stop national monetisations while continuing to buy federal debt, forcing the burden up to the federal level. WHO PAYS (presented as a prediction): the EU already has own resources and taxes in the pipeline — the money is fetched from citizens’ and companies’ pockets, and that is what pays it back; a rising tax rate is in prospect. The finance committee’s statement holds that Finland’s total tax rate must not rise even with EU taxes, producing an arithmetic dead end: Miettinen: then fewer domestic transfers — Malinen: precisely, and where do we cut, we cut social security and pensions. FINAL CONCLUSION: this fund is precisely a gateway to an EU federation — and at the end of that road lies nothing but the dismantling of the Finnish welfare state model; Miettinen closes to MPs: now is the moment to press the button. CONTEXT AFTER THE FACT: Parliament approved the recovery instrument in May 2021, so the episode is an intervention before the decision rather than a description of the outcome.