European Union leaders meet in push for COVID recovery deal

Cornelia Mascio
Luglio 18, 2020

With the 27 countries at odds on a host of issues including the overall size of the recovery fund, the criteria used to distribute the money and how to supervise expenditure, reaching an agreement at the summit is far from guaranteed.

While Michel suggested keeping the Commission's €750 bn recovery fund proposal, consisting of €500 billion in grants and €250 billion in loans, he offered a smaller budget, suggesting a €1,074 trillion Multiannual Financial Framework (MFF), instead of the €1.1 trillion initially proposed. The southern states, like Italy and Spain, believe that the aid should be given as grants, while Austria, Denmark, Sweden, and the Netherlands contend that it should be provided as loans.

They also need to agree on a seven-year budget worth another €1.07 trillion.

For the Dutch Prime Minister and head of the "frugals", Mark Rutte, the bloc's recovery fund should come with structural reforms, "so that all European Union member states are also strong, and in the event of a subsequent blow, such a fund will not even be necessary".

German Chancellor Angela Merkel, who celebrated her 66th birthday around the negotiating table in Brussels, was also cautious on chances for an agreement, envisaging "very, very hard negotiations".

Respecting democratic standards was key, an idea that prompted nationalist Hungarian Prime Minister Viktor Orban to threaten to veto the entire plan.

Another economic shock could expose it to more eurosceptic, nationalist and protectionist forces, and weaken its standing against China, the United States or Russian Federation. "The whole world is watching us".

"The big picture is that we are faced with the biggest economic depression since World War II", Greek Prime Minister Kyriakos Mitsotakis said.

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