Tag Archives: Frugal Four

EU Special recovery plan Council

Invitation letter by President Charles Michel to the members of the European Council ahead of their meeting on 17-18 July 2020 reads as follows:

«On Friday, for the first time since the onset of the COVID-19 crisis, we will be able to meet again here in Brussels.

The COVID-19 pandemic has claimed many lives across Europe and dealt a serious blow to our economies and societies. It continues to impact our lives. All our efforts must focus on building a sustainable recovery. To that end, our meeting this week will be dedicated to the Multiannual Financial Framework and the Recovery Plan.

Since our last summit in June, we have worked intensively with all of you and taken due note of your concerns. On that basis I have put forward a proposal to address the key difficulties and to build bridges between the different positions. Finding agreement will require hard work and political will on the part of all. Now is the time. A deal is essential. We will need to find workable solutions and come to an agreement, for the greater benefit of our citizens.

Our meeting will start on Friday at 10.00 a.m. with the traditional exchange of views with the President of the European Parliament, David Sassoli. We will then hold our first working session and take it from there.

I look forward to welcoming you again in Brussels!»

EU leaders will meet physically in Brussels to discuss the recovery plan to respond to the COVID-19 crisis and a new long-term EU budget.

President Michel has proposed €1 074 billion to fulfil the long-term objectives of the EU, and to preserve the full capacity of the recovery plan. This proposal is largely based on the February proposal, which reflected two years of discussions between member states.

Rebates

Lump sum rebates would be maintained for Denmark, Germany, the Netherlands, Austria and Sweden.

Size of the recovery fund

The Commission would be empowered to borrow up to €750 billion through an own-resource decision. These funds may be used for back-to-back loans and for expenditure channelled through the MFF programmes.

President Michel has proposed to preserve the balance between loans, guarantees and grants to avoid over-burdening member states with high levels of debt. “This is also key for the future of the Single Market and to prevent more fragmentation and disparities,” he said.

Allocation of the Recovery and Resilience Facility (RRF)

This proposal ensures the money goes to the countries and sectors most affected by the crisis: 70% of the Recovery and Resilience Facility would be committed in 2021 and 2022, according to the Commission’s allocation criteria. 30% would be committed in 2023, taking into account the drop in GDP in 2020 and 2021. The total envelope should be disbursed by 2026.

Governance and conditionality

Based on the proposal, member states will prepare national recovery and resilience plans for 2021-2023 in line with the European Semester, notably country-specific recommendations. The plans will be reviewed in 2022. The assessment of these plans will be approved by the Council by a qualified majority vote on a proposal by the Commission.

Secondly, 30% of funding will target climate-related projects. Expenses under the MFF and Next Generation EU will comply with the EU’s objective of climate neutrality by 2050, the EU’s 2030 climate targets and the Paris Agreement.

The third conditionality proposed by the President is linked to the rule of law and the European values.
“We are taking a key step to anchor the rule of law and values in our European project and this is why I propose a strong link between funding and respect for governance and rule of law,” said President Michel.

Image: Europa building, Brussels, Dutch Prime Minister Mark Rutte.

MFF: Michel committed to political talks

“…I am totally committed to start immediately real negotiations with the Member States.  We intend to have a physical summit around the middle of July in Brussels.  We will have the occasion to focus on some concrete proposals. Before this summit, I will put on the table some concrete proposals in order to try to take a decision. We are aware that it is essential to take a decision as soon as possible” said Charles Michel, the president of the EU Council after the teleconference with the EU heads of states and government.

“… The main topic was the MFF (Multiannual Financial Framework) and the Recovery Fund. It was the first occasion to discuss at the level of the leaders the proposals put on the table by the Commission, the MFF and the Recovery Fund. It was the occasion to observe that on different points there is an emerging consensus, which is very positive. But at the same time, we don’t underestimate the difficulties. And on different topics we observe that it is necessary to continue to discuss” Michel continued.

The European Commission has already put forward a budget proposal for the recovery from COVID-19, and adopted its first proposal for the EU’s long-term budget, the 2021-2027 multiannual financial framework (MFF) package, on 2 May 2018. To respond to the economic and social fallout of the COVID-19 pandemic, the Commission proposed a revamped long-term EU budget on 27 May 2020.

The proposal includes an emergency recovery instrument, Next Generation EU, to help repair the immediate damage brought by the coronavirus pandemic and kick-start the recovery.

The Commission’s proposal is a seven-year EU budget of €1 850 billion:

a revised long-term EU budget of €1 100 billion for 2021-2027
a temporary reinforcement of €750 billion ⁠– Next Generation EU
The EU Council has been analysing and assessing the proposal. In parallel, Charles Michel, the President of the European Council has been consulting member states ahead of the video conference of EU leaders on 19 June 2020.

However the Duthc Prime Minister Mark Rutte leads a coalition of four member states that are opposed to distribute €500bn in grants to the countries most severely hit by the Covid-19 pandemic. His leadership has broad national support, according to Dutch media 61% of the voters did not support the EU recovery plan as proposed by the European Commission, and only 4% of Dutch voters responded positevly to the Commisison generous plan.

The “Frugal Four” at present including Austria, Denmark, the Netherlands and Sweden -presented their own concept for an EU recovery fund revealed to the EU capitals on 23 May. The most important point is lending. While the Commission proposal supported by Franco-German alliance includes a mixture of grants, loans and guarantees, the “Frugal Four” oppose the idea of grants, and stand for the temporary fund that should not lead to ‘debt mutualisation’, and the recipients of loans, mainlty the countries of the southeren Europe would have to display a ‘strong commitment to reforms’.
Since the end of May Mark Rutte has been at the forefront of a campaign refusing ‘gifts’ to southern European countries, promoting proposal of a ‘modernised’
The EU budget that will guarantee countries are strenghtened through the reforms, emerging with stronger economies after the pandemic crisis.