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Frugal Five delay agreement on EU recovery plan

The leaders of the Frugal 5: Mark Rutte (The Netherlands), Sebastian Kurz (Austria), Sanna Marin (Finland), Stefan Löfven (Sweden) and Mette Frederiksen (Denmark), credit: EU

EU leaders have been meeting physically in Brussels since Friday for the first time during the coronavirus crisis to discuss the recovery plan to respond to the crisis and a new long-term EU budget. Late on Sunday evening, there was still no agreement in sight.

In his invitation letter to the summit, European President Charles Michel wrote that he has put forward a proposal to address the key difficulties and to build bridges between the different positions. “Finding agreement will require hard work and political will on the part of all. Now is the time. A deal is essential.”

Michel proposed €1,074 billion to fulfil the long-term objectives of the EU, and to preserve the full capacity of the recovery plan. The Commission would be empowered to borrow up to €750 billion through an own-resource decision to increase EU’s revenues. These funds may be used for loans and for grants to the countries and sectors most affected by the crisis.

Without specifying the shares of loans and grants, he also proposed to preserve the balance between loans, guarantees and grants to avoid over-burdening member states with high levels of debt.

Lump-sum rebates would be maintained for Denmark, Germany, the Netherlands, Austria and Sweden  to compensate them for higher contributions to the EU budget after Brexit. During the summit, Finland joined the group of the Frugal Four (Denmark, The Netherlands, Austria and Sweden), turning the group into a Frugal Five.

Based on the proposal, member states will prepare national recovery and resilience plans, notably country-specific recommendations. The plans will be reviewed in 2022. The assessment of these plans will be approved by the Council by a qualified majority vote on a proposal by the Commission.

But the now Frugal Five oppose the size of the grant part of the fund or want to replace it by only grants. They also want to impose stricter conditions on the member states receiving the funding, such as economic reforms and respecting the rule of law.

Mark Rutte, the prime minister of The Netherlands, has even demanded the right of a single member state to veto the disbursement of the money. Before the start of the summit, he said that countries needed to present and initiate concrete plans for economic reforms in order to access the funds. Their budget plans should be improved so that there will not be any calls for financial help in future crises.

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The Swedish prime minister, Stefan Löfven, has also criticized the proposal and claimed that it would indebt future generations.

After bilateral talks, all the night, European Council president Michel ended a brief plenary meeting early Monday morning. Next plenary meeting is scheduled to start at 16 pm today.

The EU leaders are reportedly closing in on a new proposal which would include up to €400 billion in grants. The Frugal Five have until now insisted on only loans in the recovery fund.

Update: Around 19 pm Michel twitted:

“I am going to send my new proposal to all the leaders. We have worked very hard and this proposal is the fruit of lots of collective work. I know that the last steps are always the most difficult but I am convinced that an agreement is possible.”

M. Apelblat
The Brussels Times

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