Home World EU DIVIDED: Macron and Merkel spark fury in power-struggle over eye-watering fund

EU DIVIDED: Macron and Merkel spark fury in power-struggle over eye-watering fund


The European Commission has put forward a blueprint, largely based on a Franco-German proposal, for the so-called pandemic recovery fund. But now friction has emerged between European capitals as President Emmanuel Macron and Chancellor Angela Merkel prompt a hasty response from the rest of the bloc. Just last night the Frenchman travelled to the Netherlands in a bid to convince Mark Rutte to come onboard with his plan.

The Dutch prime minister is an outspoken critic of the proposal, insisting on a drastic rethink before it can be rolled out.

The proposed package consists of €500 billion in grants and €250 billion in loans.

The debts would be repaid by EU member states using increases to national contributions to the bloc’s long-term budget.

Brussels has also pitched a series of new EU taxes that could help claw back the funds.

Mr Rutte has said the money should be distributed in the form of loans and should come with strict political conditions, such as the need to accept austerity measures as the price to pay for a bailout.

With EU leaders set to meet in Brussels, for the first time since the coronavirus outbreak, on July 17, member states have lashed out at Paris’ “take-it-or-leave-it” approach.

A Nordic diplomat told the Politico website: “The more the big two come with a take-it-or-leave-it package, the harder it makes life for the other countries.

“No country will agree to be a cheerleader for the big two countries.”

The so-called “Frugal Four” – Denmark, Austria, Sweden and the Netherlands – have been the most vocal opponents to the plan.

An EU official said: “The Frugal Four are not very homogeneous.”

They also accused the fiscally conservative northern states of poisoning the atmosphere with attacks on their southern partners.

“Austria will be extremely flexible in the end, but Chancellor Sebastian Kurz’s rude rhetoric has toxified the whole climate,” the official said.

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“We want to help others, but the others have to make sure they get their houses in order.”

Conditions have been rejected by southern member states, who remember the austerity-driven conditions Greece had to accept for its Eurozone bailout a decade ago.

The frugals have begun examining how the Commission can ensure tighter oversight over spending once payments have been distributed.

Brussels has suggested a system where governments’ reforms would need to be given the green light by the EU’s Commission, Parliament and Council.

Diplomats have warned it might take multiple summits before leaders can reach an unanimous agreement on the recovery fund.


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