European recovery Plan : a gesture in the direction of the frugal - to The Point

The forcing of frugal is starting to pay off. After a day of blocking on the size of the stimulus package, Charles Michel, the president of the Council, has put

European recovery Plan : a gesture in the direction of the frugal - to The Point

The forcing of frugal is starting to pay off. After a day of blocking on the size of the stimulus package, Charles Michel, the president of the Council, has put on the table a new proposal. The total amount of the stimulus package, the 750 billion euros, would remain unchanged, but the balance between grants and loans is no longer the same.

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At the request of the Swedes, Danes, Austrians and Dutch, instead of the 500 billion euros of grants – desired by France and Germany, Michel proposes to reduce subsidies to 50 billion euros. Loans, on the other hand, would be enhanced by the equivalent amount. It would, therefore, with a plan to raise 450 billion euros in subsidies, with 300 billion euros of loans.

Mark Rutte isolated on the governance of the plan

However, in order not to antagonize Italy and Spain, the budget tool main – the fund called "facility for recovery and resilience" – would be enhanced from 310 to 325 billion euros. It is this fund that will benefit the most in Rome and Madrid (about 60 billion euros each) to rebuild their economy. The delegations are working now on the new proposal, Michael.

A global agreement is not yet in sight considering the many difficulties that remain to be overcome. Mark Rutte, the Dutch Prime minister, still requires a governance strict use of funds. All day Friday, he camped on the idea that the national plans of investment must be adopted by the Council acting unanimously. A way to control more closely the expenditure of the Italians, in which the Dutch Prime minister does not have confidence in. The netherlands are isolated on this position, because even the other countries frugal adhere to the proposal Michel of a qualified majority.

Embrace discount

With its hard-line position, Mark Rutte has pissed off a few delegations, including the one conducted by Giuseppe Conte. The president of the Italian Council has no desire to see a resurgence of the idea of a troika, which would impose, in a manner burdensome, unpopular reforms in his country. The calvary of the Greek is in all the heads... " If the governance is too heavy, too suffocating, there is a risk of pushing Italy in a reaction to the Greek when the people have voted for Syriza ", is concerned a diplomat. Alone against all, Mark Rutte will be able to hold on unanimously ?

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Sebastian Kurz, for his part, multiplied the releases on the discount of the frugal, the existence of which no longer corresponds to nothing since the Uk has left the EU. France and Italy pay, so absurd, the discounts enjoyed by Germany, Austria, Sweden and the netherlands. The president Macron request, therefore, their gradual termination. In the initial proposal of Charles Michel, he has not had gain of cause. The discount would be retained in full by the frugal (and Germany) until 2027. This represents a total of 6 billion euros per year, half of which benefits the Germany. In other words, it would be a "shortfall" of 42 billion euros to the european budget on the fiscal year 2021/2027. The countries of central Europe are speaking out against the discount given to the " rich countries "...

Merkel stumbles on own resources

there are many other topics that are not addressed and are just as thorny. To start with the repayment of the great debt of the Commission. The "own resources" (the 4 taxes envisaged), which may cover the repayment from their introduction are a topic of contention between France and Germany. Emmanuel Macron believes that it is necessary to avoid at any cost to raising taxes on the Europeans not to break the recovery. Hence its commitment to endow the eu budget, new taxes on carbon or on the giants of the digital, which today, are largely to tax. Chancellor Merkel believes that the States must repay themselves the loan, by increasing their national contribution.

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Finally, it is necessary to set again the two conditionalities of the fund raise : 30 % of the funds must be dedicated to carbon neutrality and, in the case of non-respect of the rule of law by a member State, payments could be suspended. Poland is opposed to it and can count on the support of the Hungary of Viktor Orban. "There are still a lot of work," says a diplomat. Before the summit, Mark Rutte estimated that the chances of success at " less than 50 % ". "There is still a small chance, but it will be hard," says-t-on in the French camp.

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Updated Date: 18 July 2020, 11:33

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