The European Council summit ended on Friday (19 June) without agreement on the EU recovery fund. However, German Chancellor Angela Merkel made it clear that she wants to act quickly, and the next round of negotiations is scheduled for mid-July.
Merkel spoke of “very constructive” talks and expressed confidence that the circumstances were such that “negotiations could start well,” adding that everyone was aware of the extraordinary situation.
But the Chancellor conceded that “the bridges we have to build are large”.
The German government is striving for a quick agreement, as expectations of the countries and worst particularly affected by the COVID-19 pandemic are high and time is pressing – especially as there is no legal possibility to disburse funds before the decision on the EU’s own resources is ratified in national parliaments.
“The measures must not come at some point, but in such a way that they also give rise to confidence in the economic construction of Europe,” Merkel said. For this reason, she said that speeding up bureaucratic procedures must also be considered.
Although there was broad agreement between member states on the basic framework of the system, detailed discussions on loans and subsidies had not yet been held.
The German government is still particularly concerned about rebates, indicators for distributing funds, as well as the programme’s duration. Indeed, Berlin continues to argue that the funds be repaid before the end of this financial period.
Austrian Chancellor Sebastian Kurz (ÖVP) expressed a similar view in a tweet after the conference, in which he outlined his position, which was closely coordinated with the other members of the “Frugal Four”, Denmark, Sweden and the Netherlands.
Typically, their main demand is to have the highest possible share of repayable loans as part of the recovery fund. However, Kurz also insists on a “clear time limit”, as well as a discussion on earmarking, distribution and payment conditions.
In a press release, Kurz specified his demand and mentioned, for instance, investments in vaccines and drugs to prevent a second wave of coronavirus. His Swedish counterpart, Stefan Löfven, offered little hope of a speedy agreement, as he said there was still a long way to go. Both the multi-year financial framework (MFF) and the EU Recovery Fund would require “major changes” before they were “good enough”, Löfven said at a press conference.