Croatian PM expects Frugal Four to accept compromise on coronavirus recovery package

Andrej Plenkovic (Photo: HINA/ Daniel KASAP)

ZAGREB, July 19 (Hina) – Croatian Prime Minister Andrej Plenkovic, who is taking part in the ongoing negotiations on the EU Multiannual Financial Framework (MFF) and the recovery package, said on Sunday that he expected a compromise on the topics on the agenda of the face-to-face meeting in Brussels.

“We hope that the group of frugal countries that find the total size of the package problematic, will find the way to the compromise and that solutions will be found for management of the EU Next Generation instrument and for the issue of connecting the rule of law with the disbursement of the budgetary funds,” Plenkovic said just before the resumption of the summit meeting on Sunday afternoon.

The summit meeting of the European Union member-states leaders, who convened in Brussels on Friday for the first time since the outbreak of COVID to discuss European Council President Charles Michel’s proposal for the MFF and the recovery package, resumed at noon on Sunday.

The first two days of the summit mainly passed in the form of meetings of smaller groups of leaders or in the form of bilateral talks, after Michel’s initial plan for the Multiannual Financial Framework of €1 074 billion to fulfill the long-term objectives of the EU and the size of the recovery fund up to €750 billion.

The EC President, who is chairing the summit, on Saturday outlined a new proposal considering the share of loans and grants in the economic rescue plan for the hardest-hit countries. The latest proposal envisages the disbursement of €450 billion as the grants while the loans scheme from this fund would be in the amount of €300 billion. The previous share of grants and loans was €500 billion to €250 billion.

The recovery package is aimed at managing the biggest economic shock the EU bloc has ever had to confront in its history.

The latest proposal is an attempt by Michel to persuade the fiscally conservative countries, the so-called Frugal Four — Austria, Denmark, the Netherlands and Sweden — to give their consent to the expenses under the recovery fund.

Michel has also increased the proposed allocation of non-repayable aid from the Recovery and Resilience Facility (RRF) from the previous €310 billion to €325 billion. The size of the RFF, a key element of the Next Generation EU, was previously set at €560 billion, and the money from that fund is supposed to go to the countries and sectors most affected by the corona crisis. The latest changes envisage the size of RFF of €625 billion.

However, this increase would lead to slashing some other funds in the EU programmes, including a lowered budget for Horizon 2020, the EU Research and Innovation programme.

Merkel hints at possibility of longer negotiations

German Chancellor Angela Merkel said on Sunday that it was possible that EU leaders will not reach agreement on their third day of talks on plans to boost the bloc’s economies, which have been ravaged by the coronavirus, Reuters reported.

“There is a lot of goodwill but also in many positions. I will make every effort but it is possible that there is no result,” she said in Brussels.

The outcome of these marathon negotiations in Brussels seems still uncertain.