September 26, 2020

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EU leaders hold virtual summit on coronavirus recovery plan

The “stepping stone” video summit is aimed at striking a compromise on the bloc’s proposed coronavirus rescue fund. Most contentious is whether costs should be borne by Brussels or individual governments.

Leaders of EU member states are meeting virtually Friday to forge a compromise on how a coronavirus rescue package should be managed.

The talks come as Europe faces the biggest recession in its history, with member states under pressure to tackle the economic impact of the coronavirus on a continent-wide basis.

Here’s what they are discussing

Leaders will discuss the European Commission’s proposed €750 billion ($825 billion) rescue fund to cushion the economies of member states from the effects of the COVID-19 pandemic.

The plan is to provide aid through a blend of debt mutualization, grants and loans.

Under a proposal laid out by French President Emmanuel Macron and German Chancellor Angela Merkel, the Commission will raise money on the financial markets. It is to be repaid over decades, from 2028 until 2058 at the latest. The move would require the approval of all EU member states.

However, there is opposition from the so-called “Frugal Four” — the Netherlands, Sweden, Denmark and Austriawho have said they will seek to rein in the spending.

The four are also opposed to the idea of issuing common debt that would be pooled by the bloc as a whole. They would prefer the money to be handed out as part of a system of loans to individual nations rather than grants the bloc would pay for as a whole.

European Commission President Ursula von der Leyen also wants to “revamp” the EU’s next long-term budget plan for a predicted €1.1 trillion in spending from 2021-27. She said EU leaders needed to “pull together” and swiftly settle on the “ambitious and balanced” recovery plan.

Messages to national leaders 

The summit host, European President Charles Michel, said nations had a “collective responsibility to deliver.” 

Now is the time to engage, he tweeted.  

European Central Bank head Christine Lagarde urged leaders to act to spearhead revival, diplomatic sources and officials reported.  Lagarde told the videoconference that the EU economy was “experiencing a dramatic fall.” 

How likely is it to succeed?

DW’s Brussels correspondent Georg Matthes said there were very real obstacles still to overcome.

“I’d say there are some legitimate concerns on the part of member states who are worried that mutualized debt will set a precedent for the future and many countries don’t want to go down that road.

However, said Matthes, there was a general consensus that Europe did need a bloc-wide response to the pandemic.

“There are a lot of things to discuss. When it comes down to solidarity and the recognition that a recovery fund is needed, everybody is pretty much on the same page.”

So what are the next steps?

It’s hoped that Friday’s discussions could culminate with a deal on both issues in July, should member states overcome their differences.

EU officials and diplomats who spoke in the build-up to the virtual meeting said its goals were limited and a common declaration of goodwill would be viewed as a success.

(DW)