It will be “very difficult” to reach an agreement by July at the latest on the EU multiannual budget and the corona recovery fund, given the disagreements over the size and allocation of the funds, EU officials and diplomats in Brussels acknowledge.
“It would be very good to have a political agreement in July,” admitted the Commission Vice-President, Valdis Dombrovskis, after the finance and economic ministers' meeting last Tuesday. But Dutch Prime Minister Mark Rutte, one of the four opponents of higher national contributions to the EU budgets, is already known to be in “no hurry.”
EU President Charles Michel has meanwhile contacted the EU leaders to ask their opinion on the European Commission's compromise proposal. After this first round, an EU official told EURACTIV that it would be “very difficult” to achieve the necessary unanimity of the 27 leaders before the summer holidays.
Almost everyone agrees that there is urgency, as the EU faces the deepest recession in its history. To counter the economic consequences of the pandemic, the European Commission has proposed an unprecedented recovery fund of 750 billion euros.
In February, the EU leaders also failed to reach an agreement on the budget because differences between northern, southern, and eastern member states could not be resolved. The updated MFF and the recovery fund are particularly questioned by the Netherlands and Austria, but also by Eastern European countries such as Hungary.
Germany wants a compromise to be found “very quickly” on the EU recovery fund to help countries affected by the corona crisis. Some EU countries are in serious trouble and need quick assistance, Germany said during a meeting with the EU finance ministers.
Along with Sweden, Denmark, and Austria, the Netherlands took the position that the fund should not consist of grants but loans. France and Germany disagree. They want to give 500 billion euros under certain conditions as grants to the affected countries. The European Commission then came up with a kind of compromise whereby the money will now partly consist of grants and partly of loans.
In the current EU ministerial consultations, the Netherlands focuses its objections on the size of the fund and the EU multiannual financial framework. According to Finance Minister Hoekstra, the proposals lead to ‘substantially higher contributions’ for the Netherlands, starting with an increase from 1.5 billion in 2021 to 2.3 billion in 2027.
The Netherlands does acknowledge that cooperation with other countries is desirable. If every country tries to solve the crisis on its own, the ‘symmetrical shock of the COVID-19 outbreak’ will lead to an asymmetrical recovery. The cabinet is also positive about linking support to implementing reforms and investments in digitalization, research, and greening. However, Hoekstra has ‘serious doubts’ about the financing and the size of the fund.