Stingy Four and EU Move Slightly Closer to Compromise on Budget and Corona

EU heads of government held ‘constructive’ discussions on Friday during their video summit about the EU multiannual budget (€1,180 billion) and the corona recovery fund (€750 billion), but did not reach an agreement.

However, after a four-hour video meeting, the heads of state and government said they expect to overcome the crisis at the next summit, possibly in July, and promised to reach an agreement despite the large differences between member states.

As expected, there were no conclusions or results following the videoconference. The discussion was intended as a first opportunity for them to express their priorities and concerns about the package, euphemistically concealing the still existing disagreements. In this regard, the ‘stingy four’ (the Netherlands, Austria, Denmark and Sweden) take a firm stand opposite to the other EU countries.

Dutch Prime Minister Mark Rutte said afterward that the money from the corona fund must in any case reach where it is truly needed. For that reason, he does not want to use the current EU distribution key—which is based on how countries fared before the pandemic—for corona aid. That current distribution allocates large amounts not only to the heavily affected Italy and Spain but also, for example, to Poland or other countries that were far less impacted.

“It is important to help one another,” Rutte emphasized. According to him, it is crucial that “countries that had no reserves” do not fall further behind and that the Union does not become unbalanced. But from these countries, “solidarity” can also be expected to ‘do everything possible to take care of themselves in the future,’ he said. Pension system and labor market reforms, and tax collection, “all those things are necessary,” the prime minister warned, repeating his appeal.

The Dutch government underestimates with its rigid stance the “issues coming our way,” said former president Nout Wellink of De Nederlandsche Bank (DNB). He expects the consequences of the crisis to be “very big,” and thus the government must ask itself: “to what extent are you willing to be in solidarity?” “Because this is the moment of truth that is coming upon us.”

Wellink stated that as far as he is concerned, grants—the big stumbling block for the Netherlands—are not a problem. Apparently, people do not realize that the debt issues coming our way could demand very significant sacrifices from us if we want to remain part of Europe and keep Europe together, he said. According to Wellink, the Netherlands “has learned nothing in that respect from 2012,” when the Greek debt crisis divided the European Union.

Christine Lagarde, president of the European Central Bank (ECB), warned that there are risks to financial markets if no recovery support packages are put in place. France and Germany are said to be pushing for the matter to be concluded next month.

The President of the European Parliament David Sassoli told the leaders that the current package is ambitious but actually “does not go far enough for what is needed.” He warned that the European Parliament, which must approve the multiannual budget, will not accept anything less than the proposed package.

“We should see this current proposal as a starting position,” Sassoli said, which still needs improvement. The European Parliament wants a larger budget, while some countries still want to cut spending. Sassoli agreed with Rutte and is also opposed to support for the hardest hit member states solely in the form of loans. That would lead to “unequal effects on the debt burdens of the member states and would only cost the EU more money as a whole.”