The Northern countries’ proposal is a downward compromise: it does not foresee any of the novelties proposed by France and Germany that had attracted transversal praise and compliments. Within the European Union, the four conservative countries are a minority, but in the coming weeks they will still try to negotiate limits and limits to the Franco-German proposal, which they consider too ambitious.
The new proposal is contained in a one and a half page document (PDF) entitled EU non-paper support for efficient and sustainable COVID-19 recovery and differs significantly from the agreement found by France and Germany, which provides for the creation of a 500 billion euro fund – raised on the financial markets with EU securities, guaranteed by the European Union budget – to be distributed with non-refundable grants.
Instead, the four northern countries explain that they cannot accept “instruments that lead to debt sharing”, nor “significant increases in the European budget”. Instead, they propose a Recovery Fund that does not collect money on the markets and which limits itself to providing loans “on favorable terms”: on condition, however, that the countries that receive the money commit themselves “forcefully” to a program of reforms (that is substantially to keep their public debt under control).
The counter-proposal has not been judged equally positively by analysts and observers, who consider it a starting negotiating position to obtain greater advantages in the future negotiation. “The document is so intellectually lazy that it’s hard to think they really believe it,” commented Lucas Guttenberg, former economist of the European Central Bank: «more than a political counterproposal, it seems to me a move to increase one’s requests».
The four countries rely heavily on the fact that the European Council, the body that includes heads of state and government and sets the Union’s political agenda, makes the most important decisions unanimously. In fact, it seems that the Netherlands may already be isolated in their rigidity in the early stages of the negotiation, as happened recently during the negotiations for a first package of European reforms against the coronavirus. “The Danes don’t have the euro and will have little authority over it. The Finns remained silent. The Austrians will be convinced by their neighbors “, hypothesizes François Heisbourg, who deals with Europe for the International Institute for Strategic Studies.
The European Commission is expected to announce its proposal for the Recovery Fund in three days, Wednesday 27 May. Analysts agree that he will remember very closely the agreement found by France and Germany. The European Council where the various proposals will be discussed is scheduled between 18 and 19 June.