EU debates COVID-19 stimulus strategy

European Union leaders began the process of approving sweeping stimulus packages for European countries that have been hammered by the coronavirus.
calendar icon 19 June 2020
clock icon 7 minute read

The aid is to be disbursed mainly among worst-hit nations, like Italy and Spain, but many differences must still be settled before the necessary unanimous agreement. Officials and diplomats expect a deal could come in July.

"We have a collective responsibility to deliver," the leaders' chairman Charles Michel said.

The proposed aid is exposing recurring rifts within the bloc, highlighting the disparities between northern EU nations and their southern counterparts.

Southern EU countries were already highly indebted before the coronavirus crisis. Those countries are calling for economic grants that don’t carry steep conditions. Conversely, more frugal northern countries want only conditional loans.

"Conditionality is a big issue. An agreement on reforms could create room for manoeuvre on grants," one diplomat said.

Sweden, Denmark Austria and the Netherlands, the so-called "frugal four", also believe the proposed recovery fund is too big and allocation of the money is not sufficiently linked to the pandemic.

Eastern EU countries say too much money will go to the south and want to maintain an earlier spending focus on agriculture and closing development gaps with the richer west.

Wealthy net payers to EU coffers, including the frugal four and Germany, want to retain past rebates on their contributions that others want scrapped and there is no agreement on how to eventually repay the Commission borrowing.

Officials expect EU leaders will need at least one or two more meetings in person next month to reach a final deal, which would also mark a step towards more integration in the bloc after the damaging setback of Brexit.

Read more about this story here.

The aid is to be disbursed mainly among worst-hit nations, like Italy and Spain, but many differences must still be settled before the necessary unanimous agreement. Officials and diplomats expect a deal could come in July.

"We have a collective responsibility to deliver," the leaders' chairman Charles Michel said.

The proposed aid is exposing recurring rifts within the bloc, highlighting the disparities between northern EU nations and their southern counterparts.

Southern EU countries were already highly indebted before the coronavirus crisis. Those countries are calling for economic grants that don’t carry steep conditions. Conversely, more frugal northern countries want only conditional loans.

"Conditionality is a big issue. An agreement on reforms could create room for manoeuvre on grants," one diplomat said.

Sweden, Denmark Austria and the Netherlands, the so-called "frugal four", also believe the proposed recovery fund is too big and allocation of the money is not sufficiently linked to the pandemic.

Eastern EU countries say too much money will go to the south and want to maintain an earlier spending focus on agriculture and closing development gaps with the richer west.

Wealthy net payers to EU coffers, including the frugal four and Germany, want to retain past rebates on their contributions that others want scrapped and there is no agreement on how to eventually repay the Commission borrowing.

Officials expect EU leaders will need at least one or two more meetings in person next month to reach a final deal, which would also mark a step towards more integration in the bloc after the damaging setback of Brexit.

Read more about this story here.

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