EU leaders discuss recovery fund amid pandemic
Northern, eastern EU states oppose economic recovery plan favoring southern countries
EU leaders on Friday are discussing the bloc’s recovery fund and next long-term budget amid the novel coronavirus crisis.
Not many, however, expect a deal from the video-conference of European heads of state because of the deep divisions between the EU governments.
The most optimistic scenario suggests finding an agreement in July when the leaders are supposed to meet in person, Chancellor Angela Merkel told the German parliament on Thursday.
Friday’s virtual gathering is only considered a starting point for negotiations on the European Commission's €1.85-trillion ($2-trillion) budget proposal.
The plan includes a €750-billion ($840-billion) new recovery instrument to help relaunch the European economy after the COVID-19 crisis.
It would be financed by a credit that the European Commission takes from the international financial markets.
The scheme would provide €250 billion worth of loans and €500 billion in grants for EU member states.
The recovery fund named “Next Generation EU” tops the EU’s ordinary €1.1-trillion ($1.2-trillion) budget for the period of 2017-2021.
The prime ministers of the Netherlands, Austria, Sweden, and Denmark -- the so-called Frugal Four -- opposed the plan this week in an opinion piece published in The Financial Times.
They insist the recovery fund can only be based on loans that member states need to pay back later.
“How can it suddenly be responsible to spend €500 billion in borrowed money and to send the bill into the future?” they ask, reminding that “money spent will have to be earned and paid back by the taxpayers”.
The Eastern European countries also find the proposal unfair. Hungarian Prime Minister Viktor Orban also expressed disappointment with the proposal last week at a Visegrad Four -- cooperation of Hungary, Slovakia, the Czech Republic and Poland -- summit in the Czech Republic.
Orban said he thinks the recovery proposal reflects the interest of the Mediterranean countries which are richer than the eastern ones even during the crisis, which is "absurd".
