October 30, 2020

EU leaders discuss new proposal that would give the Netherlands the power to block European aid


“The sun rises for the first time in Brussels in ten days. Courage, ambition, unity.” It is the optimistic message from the European Commissioner for Finance, Paolo Gentiloni, at the beginning of the second day of the European summit. Of course, if the agreement comes, it will be through new assignments to the Netherlands and its allies. After a first day in which there was no progress due to the Dutch castling in the ability to veto European aid disbursements due to the coronavirus crisis, this Saturday the President of the European Council, Charles Michel, has presented a new proposal –Negobox– that yields to the demands of the self-styled frugal – Austria, the Netherlands, Denmark and Sweden.

The blockade of the Netherlands and its allies warms the European summit of reconstruction and puts it at risk

The blockade of the Netherlands and its allies warms the European summit of reconstruction and puts it at risk

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Michel has presented it before the start of the summit to the German chancellor, Angela Merkel; Italian Prime Minister Giuseppe Conte; the President of the Spanish Government, Pedro Sánchez; the French President, Emmanuel Macron; and Dutch Prime Minister Mark Rutte. And what does it consist of?

First, it maintains the total recovery fund amount of $ 750 billion, but changes its nature. That is, instead of having 500,000 million in transfers and 250,000 in loans, there are 450,000 in transfers and 300,000 in loans (60% -40%). 450,000 million in transfers is below the 500,000 of the Franco-German proposal and even further from the 1.5 billion of the Spanish proposal at the beginning of the crisis.

What Michel does is reduce the part of the fund that was destined to reinforce the programs of the Multiannual Financial Framework – the EU’s multiannual budget 2021-2027, which is managed by the European Commission – to increase the part of loans and transfers linked to national programs in 15,000 million, from 310,000 to 325,000 million. Thus, as the share of loans and 15,000 that of transfers, the resilience and recovery fund, increased by 50,000 million, it would go from 560,000 to 625,000 million. In other words, the President of the Council tries to compensate for the reduction in transfers by increasing the money managed by governments to the detriment of the European Commission.

The other issue in which the new proposal yields to the frugal, is in governance. That is, how the disbursement of aid is controlled. Rutte has insisted on the veto, against which the rest of the room stood, for fear that the blockade would be permanent – from Hungary on the rule of law, for example. However, Michel has devised a so-called “emergency brake” that could be activated by any state if it has doubts about how a country is managing aid. The dispute would be debated at Ecofin, the meeting of EU finance ministers and, if necessary, at a European Council of leaders. In other words, the Netherlands – and any of the 27 – would be given the power to block aid.

But not only. The President of the European Council, far from reducing or eliminating rebates – compensatory checks for net taxpayers – as planned after Brexit – were born as a concession to Margaret Thatcher -, increases them considerably, to 46,000 million in seven years.

“This is a package and there are many more problems to be solved,” explain Dutch diplomatic sources: “But the governance proposals put forward by Michel are a serious step in the right direction. Many problems remain open and it will depend on the next 24 hours that we can solve them. ”

Sources of Moncloa, for their part, foresaw that the “second session ends in the early afternoon”, although it depended “on the progress of the negotiations”.

“The general envelope remains unchanged,” argues another diplomatic source, “but with a new distribution between grants and loans that allows countries to provide more grants to finance their recovery plans. Discussions are taking place in a constructive and peaceful environment. Each delegation is currently analyzing the new proposal. ”

At 1:00 p.m., after two hours of debate from the 27, the plenary was dissolved to continue the talks in smaller settings.

Michel proposal by eldiario.es on Scribd


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