Economy

EU reconstruction aid: “Economical four” attack Merkel and Macron

REUTERS / Hannibal Hanschke

A violent dispute is looming in the EU over the planned reconstruction aid after the Corona crisis.

Austria, Sweden, Denmark and the Netherlands presented a counter-proposal to the Chancellor Angela Merkel and French President Emmanuel Macron’s € 500 billion concept at the weekend.

Now EU Commission President Ursula von der Leyen is asked.

A violent dispute is looming in the EU over the planned reconstruction aid after the Corona crisis. Austria, Sweden, Denmark and the Netherlands presented a counter-proposal to the Chancellor Angela Merkel and French President Emmanuel Macron’s € 500 billion concept at the weekend. Instead of non-repayable grants, it only provides for cheap loans.

You don’t want a “debt union through the back door,” said Austrian Chancellor Sebastian Kurz of the conservative ÖVP on Saturday on Deutschlandfunk. It is therefore also important to limit the support provided through the emergency fund. The concept of the countries that call themselves the “Economical Four” speaks of two years.

Consensus-based concept hardly a problem for von der Leyen

The difficult task of making a compromise proposal now lies with EU Commission President Ursula von der Leyen. On Wednesday, she and her agency want to present a new draft for EU finances from 2021 to the end of 2027, which should also include a reconstruction plan for the economy, which has been hard hit by the corona pandemic.

In view of the widely differing positions of the member states, it should hardly be possible to present a concept that is capable of consensus. Von der Leyen recently showed clear support for the German-French model, but now sees clearly that it may not be possible to implement it.

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All important budgetary decisions can only be made unanimously in the EU. It is conceivable that the heads of state and government must therefore struggle personally for a compromise at a summit.

Debt dispute in the EU

The background to the position of the “Economical Four” is that they belong to the group of the largest net contributors in the EU in relation to economic power and population. In 2018, the Danes were even ahead of the Germans in terms of spending per capita for the EU. Austria, Sweden and the Netherlands followed immediately.

“We want to help, we want to show solidarity, but we are also committed to the people of our country,” said the Austrian Chancellor. It was therefore important to prevent the communitization of debts that the southern countries and France wanted.

Until recently, the federal government held this position
represented, but now gave pressure from the south in the Corona crisis
to. One reason for changing course is the concern that
Countries such as Italy continue to face a steeply rising debt burden
could collapse.

National economic aid in the Corona crisis is a sign of the already existing imbalance in the Union. Germany can afford to provide as much support as all other EU countries combined – even though the share of economic output is significantly lower.

In countries like Italy, the position paper of the “frugal four” causes outrage

One of the few major parallels between the two proposals for a reconstruction fund is that the money required should be raised by the EU Commission on the capital market. Merkel and Macron proposed an amount of around 500 billion euros in mid-May. The group of “Frugal Four” initially did not mention any size on the weekend.

In countries like Italy, the position paper from Austria and Co caused outrage, as expected. The severe recession calls for “ambitious and innovative proposals” because the internal market with its advantages for all Europeans is in danger, Minister for Europe Enzo Amendola said on Twitter. The paper is defensive and inappropriate.

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In contrast, there were mixed reactions from Germany. While Union politicians like the CDU leader Annegret Kramp-Karrenbauer defended Merkel and Macron’s proposal, the FDP parliamentary group in the Bundestag proposed to make the proposal of the four countries the “basis for the reconstruction plan after the Corona crisis”. “While Merkel and Macron want to clear the way for permanent new debt, the four countries are encouraging European law,” said Christian Dürr. “New debts regardless of crises and emergencies would be irresponsible and most likely not compatible with the EU treaties.”

Green Party MEP Rasmus Andresen, on the other hand, described the new proposal as “an arrogant statement by states that have not grasped the seriousness of the situation”. Offering loans to highly indebted countries and linking them to tough conditions such as in the euro crisis would exacerbate the economic crisis, he criticized. “If the economic crisis worsens, the EU will fly apart.”

By Fabian Nitschmann and Ansgar Haase, dpa

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