Recovery fund – Grants, controls, issue of securities and national contributions: the 4 points on which the rigorous countries are ready for confrontation

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THE penalty takers will try to lower the total amount and in particular the grants. They will oppose a massive collection of money on the market and the introduction of new taxes. They will want a strict control external on spending. Finally, they will defend the discounts they benefit from national contributions to the multiyear balance sheet, as they already did well before the Covid emergency. That of the Recovery Fund it will be a long journey at least 7 months, with 4 points that already emerge as main obstacles in negotiations between EU countries. The € 750 billion proposal presented by the European Commission on Wednesday is linked to the next European budget 2021-2027 and before seeing the light it will be necessary to wait at least forearly 2021. There Road map drawn from Brussels indicates January next year as the month in which i new funds will be available and also marks which one will be there first step decisive of this path: the European Council of the next June 17 and 18. Already on that occasion, EU leaders will be called to find a agreement on the 2021-2027 budget: it will be the venue for the confrontation between the positions of the Southern countries, led by Italy and Spain, and precisely the front of the “four frugal“, Austria, Holland, Sweden and Denmark, the rigorous states. The compromise will once again be on the one hand France and on the other the Germany.

“We have been commissioned by the EU Council to work on this model”, on which “there is a basic agreement“, Explained the president of the EU Commission, Ursula von der Leyen, presenting the package it provides 500 billion to be distributed as non-repayable grants is 250 billion as loans. Now, he added, the plan “will suffer partial changes as happens in the negotiations, but I am convinced that this is the answer we need to give to resolve this acute crisis, “he explained von der Leyen. While Italy and Spain welcomed the Brussels proposal, the “frugal” states appeared immediately more critical. In particular i Netherlands: “It is difficult to think that this proposal will be the final results. The positions are far apart and the negotiations will be long ”. Less drastic comments arrived from Denmark and also fromAustria. Chancellor Sebastian Kurz he immediately made it clear, however, what the controversial points will be: “It is positive that it is guaranteed that the funds for the recovery fund will be limited in time and that “this instrument” does not lead to a debt union permanent. What has yet to be negotiated is the “Fund” amount and the relationship between grants and loans“Kurz said.

The relationship between grants and loans – The Austrian chancellor already anticipates what the first area of ​​discussion will be. The proposal of the “frugal” of which Kurz himself promoted in fact provided exclusively for gods loans and ruled out the idea of ​​a common debt. The EU Commission instead accepted the plan Franco-German which foresaw 500 billion non-repayable grants, then adding another 250 loans. On the European tables the penalty takers, the Netherlands in the lead, will aim for lower the final share of 750 billion euros and above all a resize grantsrather increasing the billions for loans. The Dutch MEP of the ECR, Derk Jan Eppink, has already invoked the veto, in case of new “European taxes that are ventilated and also for any debts of the commission “.

Funds raised on the market and EU taxes – The other major theme at the center of the debate will in fact concern the financing of the Recovery Fund. Technically, the Commission will get 750 billion by “temporarily” raising the ceiling 2% common budget own resources of the EU GDP. Increasing the difference between commitments and payments, raising the former, allows you to have a “buffer” of resources, not paid but collectable, to be used as a basis for issuing bonds. There fund-raising on the market by the Commission is one of the points to which i “Frugal” countries they immediately opposed it. However, the proposal provides that the debt thus issued must be refunded between 2028 and 2058, through the post 2027 common budget. It will therefore not be a permanent European debt. The battle will therefore be above all on numbers: or how many funds Brussels will be able to raise on the market. The way proposed by the Commission for pay the debt instead plans to draw from new taxes: about emissions, on large multinationals, on the plastic it’s a digital tax. However, the rigorists also oppose this solution.

National contributions and discounts Game Recovery Fund closed, stay on European budget 2021-27 which should be strengthened with an increase in national contributions compared to the previous budget. In part, an increase already expected, due to the exit of the Great Britain by the Union: the new redistribution of the contributions of each country had in fact been at the center of a clash last fall. Even then, the self-renamed “Friends of Cohesion” led by France, Italy and Spain and the frugal. The clash that will take place at the June summit will be almost a déjà vu: Countries like Holland, which have grown rich over the past 7 years, should pay an annual percentage contribution to the GDP higher than in the past. But the debate will mainly concern i rebate, or the discounts that the European Union has guaranteed over the years to some states and that Brussels now envisaged to gradually eliminate. In the 2014-20 budget Germany, Netherlands is Sweden have received a discount on the proportionate payment VAT revenue. To Austria, Denmark, the Netherlands and Sweden, exactly the four frugal, was also guaranteed a rebate on what paid in proportion to the Gross National Product. The penalty takers will continue to stick up for their discounts. Also for this reason, the EU Commission has already foreseen that “the current rebates could be gradually eliminated for a period of time much longer than foreseen in the 2018 proposal “.

The rigidity of external control – A passage studied from Brussels for reach out to penalty takers. As is also another point of the package on the Recovery Fund: the money that would be put into the economies of the different countries they would finance European programs. A trick that should precisely soften the group of “frugal, Reassuring them that there will be a external control on how the funds are spent by Southern European countries. The debate in this case will primarily concern the rigidity Spain, Italy & co could also be involved in this control and if the rigorist line should take over. At the same time the battle will be on how much is Which European financial programs: the Brussels package mainly includes investments in the green transition is in the digital, in the health infrastructure and in the laboratories, in the strategic sectors and in the value chains essentials in which the EU aims to be a leader.

The road map towards approval – The funds to finance these programs, as mentioned, will still be available from 2021. Until then, one is proposed as a “bridge” appropriation of 11.5 billion to be made available already this year through the initiative React-Eu, the Solvency Support Instrument to help companies threatened by the pandemic and the European Fund for Sustainable Development. If the leaders find an agreement in June, overcoming the distances existing today, the road map of the EU Commission then foresees the consultation of the European Parliament. In September the revision of the 2014-20 budget should be approved, the last step before European Council of October. The final summit in view of the adoption of the new 2021-27 multiannual budget, which is expected to December and which also includes the ratification by the Member states. According to the Brussels forecast, the Recovery Fund will therefore be operational from January 2021.

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