EU agrees to create recovery fund linked to European budget

Brussels, Apr 23 (efe-epa).- European Union leaders on Thursday tasked the European Commission in Brussels with preparing and presenting a huge investment package or recovery fund linked to the future European budget with the aim of relaunching the continent’s economy after the coronavirus pandemic, although they did not finalize the details of the plan.

“It was a promising European Council because we agreed on a very clear framework. We are convinced because this crisis is so very huge it is important to take very strong decisions,” said the European Council president, Belgium’s Charles Michel, at a press conference after the videoconference.

“This fund shall be of a sufficient magnitude, targeted towards the sectors and geographical parts of Europe most affected and be dedicated to dealing with this unprecedented crisis,” he added.

Michel said that the EC had been tasked with analyzing the precise needs for financing the recovery and on an urgent basis presenting a proposal “proportional to the challenge” facing the EU and that it should clarify what the link between the new recovery fund and the multiyear EU budget for 2021-2027 should be.

European Commission president Urusula von der Leyen declared that her intention is to increase the power of the community budget to create financing in the market and to transfer it later to the member states.

Specifically, the European government forecasts that it will need to raise the EU’s “own resources” ceiling, which regulates the amount of EU spending, from its current 1.2 percent of European GDP to “around 2 percent” of GDP over two or three years, a situation that would increase the EU’s capacity to go into debt.

“The pandemic knows certainly no borders and is blind to nationalities … Some countries are certainly hit (worse) than others and unless we act decisively and collectively the recovery will not be symmetric and divergences between member states will increase,” said Von der Leyen at a post-videoconference press conference.

The Commission president did not specify how much money could be mobilized with this system, but she said that it would amount to “trillions” of euros. Community leaders have been discussing various figures around 1.5 trillion euros (about $1.7 trillion).

When asked about whether the money would be disbursed as loans or grants – the latter of which is an option supported by Spain – Von der Leyen responded that there will be a “balance” between the two.

“Of course this has to be looked at thoroughly and is dependent on the overall result we will have, but we are not talking about billions, we are talking about trillions” of euros, Von der Leyen told reporters.

The Community executive branch, she said, will work “as quickly as possible” with the aim of preparing the fund proposal by the second or third week in May, after which it will be necessary to hold another leaders’ summit to discuss and evaluate it.

The leaders of the 27 EU member states, before that date, however, will meet again on May 6 to hold a videoconference with the Western Balkan nations, Michel said.

The heads of state and government on Thursday also gave the green light to a $540 billion euro package of urgent measures to support companies, workers and states, a deal that was agreed to two weeks ago by the Eurogroup and will go into effect on June 1.

Meanwhile, in remarks after the meeting, French President Emmanuel Macron said that Europe has “no future” if it cannot find an appropriate response to the “exceptional shock” of the coronavirus pandemic, adding that the EU’s response must come “as soon as possible, and (be) as strong as possible,” while acknowledging that disagreements among the member states remain on whether grants and/or loans should be used.


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