EU President Charles Michel anticipates difficult negotiations on Friday during the video summit regarding the corona recovery plan and the European Multiannual Financial Framework (MFF) for 2021-2027. Michel does not expect a breakthrough yet, foresees another EU summit in July, and says there is still much work to be done by the heads of government.
On the table is the European Commission's proposal for the multiannual budget (MFF) of 1.1 trillion euros and a corona recovery fund of 750 billion euros, of which 500 billion is in subsidies. Net contributors Netherlands, Denmark, Sweden, and Austria have repeatedly indicated they do not want to spend more.
These four countries primarily want the South European countries hit by the corona crisis to revive their economies with cheap loans, not with European grants or subsidies. The question is whether every application must go through all EU procedures for payments, and whether the EU bureaucracy and politicians may still attach various conditions.
EU President Michel noted earlier that the heads of government share the same views on many points. However, he expects there will be much contention about the size and content of the multiannual budget, the introduction of new European taxes, and the discounts that countries like the Netherlands currently receive.
Earlier this year, German Chancellor Angela Merkel concluded that Germany will need to contribute more to the EU, not only for recovering the economic corona damage but also for maintaining and improving the European economic infrastructure. Since then, Austria and the Netherlands have remained the main opponents of uncontrolled financial support to Southern European countries and the assumption of collective EU debt.
The Dutch coalition cabinet now says it is seeking a compromise on the EU recovery fund. According to Prime Minister Rutte, the issue is much more than just whether the fund should provide loans or grants. The four protesting EU countries believe that Southern countries, in exchange for support, must primarily reform their labor markets and pension systems.
If no solution is found at the EU summit, the European Union will emerge weakened from the crisis, warned liberal Prime Minister Mark Rutte. According to Rutte, there is more at stake. If economic disparities in Europe grow because northern countries recover faster from the crisis than southern countries, that poses a risk to stability within the European Union. Therefore, it is necessary to send money to the affected countries, thus backing earlier calls for aid to those countries.
Rutte also now agrees with other EU leaders who say that the EU must strengthen, not weaken. This is partly due to increasingly unstable international politics. Rutte points to the increasingly complex relationship between the US and China and the role of Russia. In this complicated game, Europe risks becoming a pawn.
According to Rutte, a middle ground must be found to tackle these problems. Although it mostly seems to concern the question of whether loans or grants should be provided, that is not the case according to Rutte. "The core issue is whether countries are willing to implement reforms. That is the crucial point." In this way, they must be better prepared for new crises in the future.