Merkel on EU Recovery Fund: ‘The bridges we have to build are large’

Although there was broad agreement between the member states on the framework of the basic system, detailed discussions on loans and subsidies had not yet been held. [EPA-EFE | Sandra Steins/German Government]

The European Council summit ended on Friday (19 June) without agreement on the EU recovery fund. However, German Chancellor Angela Merkel made it clear that she wants to act quickly, and the next round of negotiations is scheduled for mid-July. EURACTIV Germany reports.

Merkel spoke of “very constructive” talks and expressed confidence that the circumstances were such that “negotiations could start well,” adding that everyone was aware of the extraordinary situation.

But the Chancellor conceded that “the bridges we have to build are large”.

The German government is striving for a quick agreement, as expectations of the countries and worst particularly affected by the COVID-19 pandemic are high and time is pressing – especially as there is no legal possibility to disburse funds before the decision on the EU’s own resources is ratified in national parliaments.

“The measures must not come at some point, but in such a way that they also give rise to confidence in the economic construction of Europe,” Merkel said. For this reason, she said that speeding up bureaucratic procedures must also be considered.

Although there was broad agreement between member states on the basic framework of the system, detailed discussions on loans and subsidies had not yet been held.

The German government is still particularly concerned about rebates, indicators for distributing funds, as well as the programme’s duration. Indeed, Berlin continues to argue that the funds be repaid before the end of this financial period.

Austrian Chancellor Sebastian Kurz (ÖVP) expressed a similar view in a tweet after the conference, in which he outlined his position, which was closely coordinated with the other members of the “Frugal Four”, Denmark, Sweden and the Netherlands.

Typically, their main demand is to have the highest possible share of repayable loans as part of the recovery fund. However, Kurz also insists on a “clear time limit”, as well as a discussion on earmarking, distribution and payment conditions.

In a press release, Kurz specified his demand and mentioned, for instance, investments in vaccines and drugs to prevent a second wave of coronavirus. His Swedish counterpart, Stefan Löfven, offered little hope of a speedy agreement, as he said there was still a long way to go. Both the multi-year financial framework (MFF) and the EU Recovery Fund would require “major changes” before they were “good enough”, Löfven said at a press conference.

No consent to ‘historic’ recovery plan without new revenues, MEPs warn

The European Parliament will only give its consent to a new EU long-term budget if the basket of own resources is increased to pay for the recovery fund, the main political groups warned in a letter addressed to EU leaders ahead of Friday’s (19 June) summit. 

Brexit: Time is pressing

The German chancellor also stressed the need to reach an agreement with UK on a new trade deal with the EU as soon as possible. Merkel said that European Council President Charles Michel and European Commission President Ursula von der Leyen had reported on the state of negotiations.

“One thing is certain, we must act quickly in order to reach an agreement by autumn because then it must be ratified,” she added.

In addition to the MFF and the EU Recovery Fund, the EU-UK trade negotiations will also dominate the German EU Presidency’s agenda. The EU and the UK have a very tight schedule to reach an agreement before the end of the transition period on 31 December.

[Edited by Benjamin Fox]

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