- The Coronavirus Recovery Fund will be directed mainly to the most affected countries in Europe.
- The dispute began because northern European countries refused to make these sums in the form of aid, but rather in the form of loans.
- Hungary, supported by its populist ally, Poland, threatened to veto the entire recovery package.
The economic recovery plan within the European Union has received a strong indication of the possibility of reaching an agreement among members, after the Netherlands responded positively to the proposal put forward by Charles Michel, President of the European Council.
The Coronavirus Recovery Fund will be directed mainly to the most affected countries in Europe. A Dutch diplomat told Reuters, “The proposal on governance as put forward by Michel is a serious step in the right direction.” However, he cautioned, “in the end, this is a package and there are many more issues to solve.”
The Dutch diplomat said yesterday that it is a serious step in the right direction, but at the same time, he indicated that the issue is related to a package and that there are many questions that need clarification.
The original rescue plan includes €750 billion to help member countries recover from the consequences of the pandemic. The dispute began because northern European countries, specifically the Netherlands, Austria, Sweden, Denmark, and Finland, refused to make these sums in the form of aid, but rather in the form of loans.
Charles Michel, the former Belgian Prime Minister, suggested that every country has the right to use its veto if it questions the fact that any aid recipient country will implement, and thus temporarily disburse aid. He also suggested reducing aid in this fund from €500 to 400 billion, while loans would be increased from €250 to 350 billion.
The discussions that took place since yesterday at the summit in Brussels— the first face-to-face meeting of its kind since the spread of the Coronavirus pandemic— witnessed a lot of faltering.
The first day’s meetings ended with some tension because of the Netherlands’ position, which is described as very tough on controlling the money that can be distributed, and more broadly, because of the reservations of other “economic” countries about the recovery plan.
It is supposed to benefit Italy and Spain most of all, the two countries in the Union most affected by the spread of the new Coronavirus. They are considered among the most lenient countries in the way of spending the budget.
The Dutch diplomat said that the new package will be studied, adding that it is only a basis for negotiation, and it is still not clear if the new proposal means the full veto, which his country has demanded from the start. The Netherlands wants any granting country to guarantee the right to stop the package entirely.
The new proposal was presented at a meeting between Michel, German Chancellor Angela Merkel, French President Emmanuel Macron, Dutch Prime Minister Mark Rutte, Spanish Prime Minister Pedro Sanchez, Italian Prime Minister Giuseppe Conte, and European Commission President Ursula von der Leyen.
Hungary, supported by its populist ally, Poland, threatened to veto the entire recovery package because of a proposed condition that would imply the blockage of any bailout cash by countries perceived as violating democratic principles.
Poland and Hungary are at Brussels’ dog house because of judicial changes. The EU announced that the EC and several other member states find the freedom of judges to be weakening.