EU leaders tackle huge virus recovery plan

Saturday, 20 June 2020 00:00 - - {{hitsCtrl.values.hits}}

BRUSSELS (AFP): EU leaders launched fraught negotiations Friday, deeply divided over how to raise and then distribute a major recovery fund to revive a European economy ravaged by the coronavirus pandemic. Europe faces its biggest recession in the bloc’s 63-year history, and states are under pressure to look beyond their own borders and to find ways to lift the whole continent.

On the table at Friday’s virtual summit is a proposal from European Commission chief Ursula von der Leyen for a 750-billion-euro ($840-billion) rescue fund that, if accepted, would mark a historic milestone for EU unity. “We have a collective responsibility to deliver,” summit host Charles Michel, president of the leaders’ European Council, said on Twitter. “Now is the time to engage.” But opposition is fierce from countries known as the “frugal four” – The Netherlands, Sweden, Denmark and Austria – who have promised to fight deep into the summer to rein in the spending. “It is clear that we expect no essential agreements at this summit,” said a government official in Germany, which takes over the EU’s rotating presidency on 1 July and will drive the negotiations. “We know about the difficulties. This will be a big piece of work,” the official said. A French source called it a “warm-up round” that would “take the temperature” before leaders land a compromise in late July. Lined up against the frugals are EU countries such as Italy and Spain that were the first and hardest hit by the pandemic, and quickly asked for help from their better-off partners. Crippled with overstretched finances, these countries lack the ability to fight the recession with a wave of extra spending and are looking for a highly visible act of solidarity.

The commission’s plan is inspired by a German and French proposal in which EU money is raised on the financial markets to spend Europe-wide in the biggest slice of joint borrowing ever undertaken by the union.