“The Dutch want the suspenders and the belt”, says a European source with irony, trying to illustrate to what extent the Netherlands is blocking the approval of a fundamental fund to get out of the economic collapse in which the European Union finds itself and, especially , the countries hardest hit by the coronavirus, such as Spain or Italy.
Pedro Sánchez confirms the difficulty of closing an agreement on the anti-crisis fund soon after the tour of the Netherlands, Germany and Sweden
Holland and its partners, self-appointed frugal –Austria, Denmark and Sweden– discuss the amount of the multi-annual budget for 2021-2027 –which is less than the 1.074 trillion included in the proposal of the President of the European Council, Charles Michel– and the composition of the recovery fund, of 750,000 million – of which 560,000 are from the new recovery instrument and 190,000 are distributed in the budget–; divided between 500,000 in transfers or grants and 250,000 in loans.
In total, Spain aspires to some 140,000 million –77,000 in subsidies and 63,000 in loans, broad features–, bearing in mind that the forecasts for Brussels are that the year will end with a fall of 10.9% of GDP, as long as a second wave does not exacerbate the disaster.
But, more than 180,000 dead later in the EU, since the coronavirus pandemic broke out, the situation remains blocked, with the Netherlands the toughest country in the negotiations. “There are practically 22-23 countries that agree with the proposal,” explains a diplomatic source, referring to the opposition of the frugal plus Finland, “but the most intransigent is the Netherlands.”
And is that the Dutch Prime Minister, Mark Rutte, not only discusses the composition of the budget and the recovery fund, but he is demanding unprecedented demands on its governance in the management of any EU fund. “We did not want the European Commission to go to the markets to get into debt and then distribute money in grants, not loans,” say Dutch sources, “but as long as that is going to be the case, experience tells us that the European Commission does not it has applied the tax rules equally to all countries. So we want the Dutch government and the Dutch Parliament to monitor that the conditions for granting the money are met. ”
“The details are worth hundreds of billions”
“The details are worth hundreds of billions,” explains a community source, hinting at what is at stake at a summit put in check by the Dutch blockade for its position around the governance of the recovery fund: “The Netherlands it is in a unique position, so to speak, on some issues, especially on governance, “the sources explain:” The rest of the frugal do not share the vision of the Netherlands to demand unanimity left and right. ”
According to the proposal on the table, from the President of the European Council, Charles Michel, the governance of the fund is as follows: a Member State prepares a reform plan with which it asks the European Commission for money, which analyzes it and Subsequently, it passes to the European Council, to governments, which must approve it by qualified majority. Spain is more in favor of the qualified inverse majority, while the Netherlands defends unanimity.
According to Michel’s proposal, the financing must go to reforms linked to the European semester – the economic governance mechanism of the Community Executive, which includes fiscal limits on debt and deficits now deactivated -, the European strategic priorities – ecological and digital transition -, the country recommendations made periodically by the European Commission at 27. Well, the Netherlands wants the money to circulate as long as these reforms are effective.
Dutch Prime Minister Mark Rutte pointed this week at the Dutch Parliament to the countries that need the recovery fund for the economic disaster, such as Spain and Italy, for not having made “reforms in the last thirty years”, to justify a “strict” conditionality in exchange for the anti-crisis fund. Rutte was referring to reforms in the labor market and in the pension system that, according to the Dutch prime minister, have already been called for by the European Commission. “They just have to do it,” said Rutte in the Dutch Parliament, where he predicted that it will be “very difficult” to reach an agreement this weekend. To receive the subsidies, “countries must adopt the reforms proposed by the European Commission,” said Rutte, who argued that the Netherlands can verify that the reforms are applied when money is transferred.
“They are talking about a possible new unanimity that could occur to someone to launch spending programs once the national plans are approved,” diplomatic sources explain: “That there is also a political discussion seems that it can generate not only a difficulty of approval or not, but also unnecessary delays for expenses that must be committed in a very short time. ”
The Prime Minister, Pedro Sánchez, will arrive this Friday at the summit in Brussels, which can be extended all weekend and end without an agreement, after celebrating a tribute to the victims of the pandemic attended by the highest representatives of the European institutions, the President of the European Commission, Ursula von der Leyen; the President of the European Council, Charles Michel; and the President of the European Parliament, David Sassoli.
“If we delay the response we will delay the recovery”
“I hope to reach an agreement in July, we need it. If we delay the response, we will delay the recovery. We all have to make an effort to reach that agreement. It is important to send a message to citizens, markets and the rest of the world” , The Prime Minister along with the Swedish Prime Minister said on Wednesday: “Obviously, we will all have to resign in order to reach the agreement, because the important thing is that we give a common response.”
In other words, “a very robust injection of very solid, well-funded programs, so that what we are implementing really has the effect of recovery, resilience and reform that we all seek,” according to Spanish sources.
“I think that the agreement is perfectly possible this weekend, but I can be wrong because in this debate there are things that are not European, and non-European debates in a European context often produce unpredictable consequences,” explains another diplomatic source: “Because of the importance of the topic, the degree of general agreement in many of the elements, the consequences of a non-agreement, even if it was postponed for a few days, and, above all, the enormous difficulty involved in bringing leaders together again Under these conditions, everything would suggest that we could reach an agreement. It is not so easy to say no with all these accumulated circumstances. Having said that, I do not exclude at all that there is not. ”
“We are going to do a little memory”, says a Dutch source, “in a Eurogroup we made the decision to mobilize 540,000 million, of which 240,000 are advantageous loans through the ESM [mecanismo de rescates de la UE] without any conditionality. It is not the troika, there are no conditions. And has anyone requested it? No. So there shouldn’t be so much urgency. I don’t understand that refusal to resort to the ESM that some countries have. ”
The Netherlands argues that it is a “democratic element” to have the ability to veto items from the anti-crisis fund. “But what can be pursued with unanimity or a supermajority?” Asks a diplomatic source: “Because, of course, what you see when you see it from The Hague, maybe if you see it from Budapest, it is less funny. And Of course, if you decide that what you can block others becomes what others can block you, maybe you already begin to think that it is complicated. You just have to see what has happened in some issues relating to the rule of law, for example. ”
Indeed, in addition to the economic conditionalities, the distribution proposal takes into account the respect for the democratic norms and values of the EU, which so often puts the Government of Viktor Orbán (Fidesz / PPE) at risk. “Trusting very much that you have a capacity that others do not have and, therefore, feeding your own arsenal thinking that others are not going to use it is a little bit suicidal. The speakers of these Calvinist majorities should think that better other religions could use it against him. ”
But will there be an agreement this weekend? “It has been a hard week,” says a community source, “but I am not depressed. I am realistic. We are convinced that an agreement can be reached. But there are still differences between the 27.”