About a week ago, German Chancellor Angela Merkel and French President Emmanuel Macron launched a joint initiative to create a special EU fund worth 500 billion euros. Its purpose is to provide non-refundable loans to EU member states most affected by the COVID-19 coronavirus pandemic. The initiative's authors believe the EU will manage to borrow this huge amount in the financial markets on favorable terms under state guarantees. The latter must include the unanimous support of Merkel-Macron's plan by all the 27 EU countries.
However, a thing happened that many observers expected: prospects of an increased debt burden on the EU budget, i.e. on all the members of the commonwealth, caused "allergy" with a number of countries. While, for instance, Spain or Italy certainly welcomed receiving interest-free loans from Brussels, with head of the European Commission Ursula von der Leyen even noting that the Merkel-Macron plan complies with the line the EC reflects, for Austria, to cite one example, the initiative of Berlin and Paris was absolutely unacceptable.
As a result, Austrian Chancellor Sebastian Kurz became the mouthpiece of the protest, consistently criticizing Merkel and Macron's plan to restore the EU economy. Kurz has repeatedly expressed his position in various interviews, as well as at the recent virtual congress of the Bavarian CSU party. Ultimately, a group of countries was formed comprising Austria, Denmark, the Netherlands and Sweden, which, calling itself the "Frugal four", offered its own plan to help the EU members in need to overcome the pandemic crisis as a counter to the German-French initiative.
The "Frugal four", as well as Berlin and Paris, consider it necessary to create a relief fund at the expense of loans received in the capital markets. However, it sees further loans to individual countries exclusively on condition of repayment and interest, and for a period of no more than two years. At the same time, the group of four has not yet named the estimated maximum size of the fund to help restore the health sector and the entire economy of countries most affected by the pandemic.
Following the emergence of a counter-initiative by Austria, Denmark, the Netherlands and Sweden to restore the EU economy, disagreements among the commonwealth members have already become documented. Thus, as the German Spiegel magazine notes, head of the European Commission Ursula von der Leyen has run into a difficulty, facing a challenge of offering the union a draft economic recovery model acceptable to all the 27 member states. And she will have to do this not in some distant future, but within the next week, given the scheduled presentation of the EU financial plan for the period 2021-2027. It is no secret that the latter should also include measures to support coronavirus-affected members of the commonwealth.
Meanwhile, in Italy, the counter initiative of the "Frugal four" was predictably enough referred as to "unacceptable". A severe recession requires "ambitious and innovative proposals", as the domestic market with its advantages for all the Europeans has now run into danger, as Italian Minister for European Affairs Enzo Amendola was quoted by Ausrtia's Kurier as saying. As for the projects' "ambitiousness", the newspaper mentions that the European Parliament, whose consent is needed for the adoption of both the EU budget and the relief fund, believes that the size of such a fund should be mainly formed from subsidies to reach the amount of 2 trillion euros.
Rasmus Andresen, a German Green party MP in the European Parliament, criticized the initiative of the "Frugal four" even more sharply, Frankfurter Rundschau writes. He described it as "an arrogant statement by countries that do not realize the gravity of the situation." According to the MP, offering new loans to countries already groaning under the burden of debt is a doorway to deepening the economic meltdown within the EU, at which point the commonwealth may collapse altogether.
In his turn, Deputy Chairman of the Bundestag's Free Democratic Party (FDP) Christian Dürr suggests by contrast that the initiative of Austria, Denmark, the Netherlands and Sweden be the basis of the EU's post-pandemic economic recovery plan. The German MP pointed out that while Merkel and Macron are opening the way to a long-term new EU debt, the "Frugal four" propose to act within the existing ground rules of the commonwealth.
Brussels is due to launch specific negotiations on EU finances for the years to come on Wednesday. And since the starting positions of the key donor countries, as well as the most pandemic-affected EU member states and the European Commission, differ too much, there will be a heated debate in Brussels, the Austrian Kurier predicts.