The Netherlands, together with Austria, Sweden, and Denmark, has presented its own proposals for a European corona recovery fund. This four-country plan is fundamentally opposed to the recently published Franco-German proposal on several key points.
The proposal from the “stingy four” can be seen as a reaction to the compromise presented last week by French President Macron and German Chancellor Angela Merkel. This means there are now two proposals on the negotiation table in Brussels.
From a political-administrative perspective, EU bodies are now focusing on reconstruction after earlier emergency measures. However, prospects are bleak. The economy is shrinking on average by 7.4 percent. Despite this looming recession, the EU long struggled over the financing of a recovery plan. Familiar divides resurfaced between north and south and between rich and poor.
In this situation, Emmanuel Macron and Angela Merkel took the initiative last week. They proposed a recovery fund of €500 billion, including some other EU adjustments. The EU Commission is to raise the money on the capital market and the member states will repay it together.
The four-country proposal comes ahead of the revised EU multiannual budget that needs to pave the way for raising hundreds of billions for economic recovery. Southern European countries have been especially hard hit by the corona crisis. The Netherlands previously received sharp criticism from southern countries because The Hague was seen as being too rigid. The Netherlands is reluctant to give many billions without conditions.
On Wednesday, Commission President Ursula von der Leyen intends to present a revision of the EU multiannual financial framework 2021-2027. The four countries advocate for a temporary, one-off emergency fund. This fund would fall outside the regular EU budget and thus also outside EU laws and competencies. This would also mean that the European Parliament would have no say over it. Severely affected EU countries could apply for a loan from that fund for up to two years.
Amounts have (not yet?) been specified. First, the European Commission must determine exactly how much money is needed. Affected countries that want funds must come up with a recovery plan themselves. Merkel and Macron’s support plan is not intended as a loan but as a subsidy or gift. They are in favor of increasing the allowed debt load in Europe. The four-country group does not want this.
According to Merkel, this concerns an "extraordinary one-time effort" to support the most severely affected countries. The four countries also do not want to contribute additional money to the EU multiannual budget; they want that budget to remain valid for seven years with the recovery fund running alongside it temporarily for two years.