EU’S stimulus deal elusive
Frugal Four opposes proposed blend of debt, grants, loans
BRUSSELS — European Union leaders found that a quick deal on the bloc’s long-term budget and a multibillion-euro post-pandemic recovery plan remained beyond their reach Friday as the coronavirus ravages their economies.
After a four-hour video summit aimed at paving the way for a compromise this summer, there was common ground on the need for a quick response, but divergences persisted among the leaders of EU member nations.
“It is essential to take a decision as soon as possible,” EU Council President Charles Michel said, announcing he plans to call an in-person summit for the leaders of the 27-nation bloc for mid-july.
European Commission President Ursula von der Leyen, the head of the EU’S executive arm, said she hopes a deal can be secured before the EU closes for an August summer holiday.
“Leaders unanimously agreed that the severity of this crisis justifies an ambitious common response, one that combines solidarity, investment and reforms,” von der Leyen said. “Many leaders stressed that we must do everything in our power to reach an agreement soon in the European Council before the summer break.”
Devised to help member states’ economies cushion the impact of the coronavirus, the package is far from being unanimously welcomed. Von der Leyen said differences remain on such topics as the size of the package, how the money will be dispatched and the balance between grants and loans in the recovery fund.
To tackle the economic crisis, von der Leyen has proposed a revised long-term budget for the 2021-2027 period that would represent around 1.1 percent of European GDP after the U.K.’S departure, coupled with the temporary reinforcement of more than $8 billion set aside to combat the virus. The whole package represents a more than $2 trillion stimulus.
A blend of debt mutualization, grants and loans, the aid plan has failed to gain the approval of a group of countries known as the Frugal Four: the Netherlands, Denmark, Austria and Sweden. They oppose issuing too much common debt to support the hardest-hit countries and argue that the money should mainly be handed out in loans instead of grants.
The plan is backed by France and Germany, the bloc’s two most powerful countries. They need to convince the countries opposed to debt mutualization or increases in the EU budget that grants will benefit the whole bloc.
German Chancellor Angela
Merkel said the quartet “once again expressed their skepticism toward grants, though not so specifically, in general form. But the position has not changed there.”