EU still divided on recovery but Denmark softens its position
Denmark has softened its stance on the EU’s economic stimulus package after the pandemic ahead of a key, still-online meeting of EU leaders next week.
While Denmark remains reluctant to give more subsidies to member states as part of the corona stimulus package, Copenhagen does not want to get rid of them altogether, but only downsize, according to a government negotiating mandate sent to parliament on Tuesday. Danish.
The European Commission’s proposal for a € 750 billion stimulus fund provides for the distribution of € 500 billion in grants to member states and € 250 billion in loans.
Denmark is one of four countries dubbed the ‘four frugal’ – along with Austria, Sweden and the Netherlands – which had opposed grants as opposed to loans under the Stimulus Fund, and have also insisted on a seven-year EU budget not exceeding 1.0%. of the gross national income of the blocs.
Danish media have also reported that the Copenhagen government may be willing to accept a larger budget.
Denmark, however, will insist on continuing to receive a rebate, compensation for contributions to the EU budget originally introduced for the UK.
France and other EU countries had called for the elimination of the rebates, while the committee proposed a gradual and slow elimination.
The Frugal Four had stood in solidarity during the first round of negotiations by European leaders on the next EU budget for 2021-2027, arguing for a smaller sum after Britain left the EU.
The committee revised its budget proposal to € 1,100 billion, while in February the compromise proposal from EU Council President Charles Michel amounted to € 1,095 billion.
The leaders of the four countries had an online meeting on Wednesday, according to a tweet from Austrian Prime Minister Sebastian Kurz, and had a joint video conference with Michel on the budget and the recovery.
But Denmark’s apparent easing does not portend any breakthroughs yet, even though Germany’s Finance Minister Olaf Scholz said on Tuesday he expected a deal “at short notice.”
EU diplomats have been busy disentangling the committee’s budget of € 1.85 trillion and the recovery proposal to take a position ahead of the EU leaders’ videoconference on the issue next week.
The commission proposed borrowing money from the markets to finance the recovery, channeling it through the EU budget through loans and grants to member states, and starting to repay after 2027, for 30 years.
Countries wishing to access the stimulus fund should develop national plans respecting the EU’s green and digital goals and economic advice before the commission, in consultation with member states, approves the plans.
“The real discussion will be launched next week, so far just takes the temperature,” an EU official said.
After the online debate, Michel is expected to work on a compromise.
EU leaders are expected to meet again in person in July in Brussels for a personal meeting to try to find a compromise.
The “frugal” expressed doubts about the extent of the recovery, the precise conditions countries must meet to access the recovery money, the balance of grants and loans, and the start of repayment of the loans that have to be paid. the commission plans to take charge of financing the stimulus fund.
Another problem that the “frugal” should oppose is that of new own resources, new forms of income for the EU.
“Loans are a perfect instrument, and we don’t see a problem in the capital markets at the moment, so grants are not desirable,” said a reluctant European diplomat.
“We do not see the logic that convergence can only be achieved through subsidies,” added the diplomat.
But it was not only the “Frugal Four” who criticized the commission’s plans.
Hungarian Prime Minister Viktor Orban called the plan “absurd” and said the EU package had sparked “red lights” because it was not only made up of contributions from countries, but also loans.
Orban’s allies in Visegrad Fourur, another loose club from like-minded countries including the Czech Republic, Poland and Slovakia, had been divided over the commission’s proposal.
Poland greatly benefits and supports the stimulus proposal, while Orban and his Czech counterpart Andrej Babis railed against the plans.
V4 leaders will discuss the commission’s proposal on June 11.