On Friday morning, Czech Prime Minister Andrej Babiš spoke briefly with German Chancellor Angela Merkel about the development of the coronavirus epidemic, the multi-annual European budget, and the recovery fund. He reiterated that the criterion of unemployment from 2015 to 2019 for the distribution of money from the fund is not fair. However, he does not want to obstruct the agreement, he wrote on Twitter.
“The Chancellor is determined to approve the package soon. Okay, but I told her it had to be fair to us. Therefore, I have mentioned several times that the criterion of unemployment for the last five years for the distribution of funds is not fair to us,“ wrote Babiš.
On Friday, the President of the European Council, Charles Michel, presented, among other things, changes to the recovery fund. He partially modified the criteria according to which the money from the package is to be distributed and which has been criticized by several other countries, including the Czech Republic.
His proposal will serve as a basis for negotiations between the presidents and prime ministers of the member states at the European Council summit on the EU budget. In an effort to overcome the resistance of some countries, Michel intends to maintain discounts on payments to rich countries or to tie drawing money from the fund to the rule of law.
Michel presented a proposal based on the reactions of the leaders from the June videoconference and subsequent meetings/interviews with some of them.
“The debate has revealed strong opposition to some elements of the budget and the fund,” Michel said. He added that modifications to the Commission’s original proposal could help approve the proposal at a summit which will begin this Friday.
The Commission’s original proposal had the support of Germany, France, and also the southern European countries most affected by the pandemic. However, the countries of the so-called frugal four, which fear high corporate debt, were opposed. Michel intends to maintain discounts on budget payments for the Netherlands, Austria, Denmark, and Sweden for the period from 2021 to 2027, in order to meet one of their key requirements.
The head of the EU summits also expects the EU to start repaying this unprecedented common debt in 2026, which is two years earlier than the Commission had calculated.
Above all, the countries were upset that the Commission uses unemployment from the last five years as a criterion for allocating money. According to them, this indicator was not related to the direct impact of the crisis. Michel, therefore, decided to divide the grant package into two parts: 70 percent will be allocated in 2021 and 2022 according to the parameters proposed by the Commission, and the remaining 30 percent will be divided in 2023 according to the real decline in gross domestic product caused by the crisis.
“The President of the European Council has issued a revised proposal for this week’s European Council, which we are now considering and calculating. I definitely do not want to obstruct the agreement. I just want to win the maximum for the Czech Republic. We need the money for investments,” the PM concluded.
Title image: German Chancellor Angela Merkel, right, and Czech Republic’s Prime Minister Andrej Babis attend a news conference meeting at the chancellery in Berlin, Wednesday, Sept. 5, 2018. (AP Photo/Markus Schreiber)