Austria, Sweden, Denmark, and the Netherlands, also known as the “Frugal Four”, have presented an alternative proposal to the French-German rescue fund plan for economic recovery in the European Union following the coronavirus crisis.
Instead of grants, as proposed by France and Germany, the proposal from the four countries would be based on the provision of soft loans for a maximum of two years. The most important point is that aid money must be repaid. According to Italy, the proposal is defensive and disproportionate.
At the beginning of last week, German Chancellor Angela Merkel and French President Emmanuel Macron presented a plan for an economic recovery of €500 billion. The money that the EU plans to borrow on the financial markets will be distributed to the individual countries through the EU budget in the form of subsidies and loans. The EU would repay the money over a longer period.
The “Frugal Four” group in a counter-proposal published on Saturday advocates that money should be distributed to individual countries only in the form of soft loans, not direct subsidies.
“We are proposing a temporary, one-off rescue fund to support the economic recovery and resilience of our health sectors,” the proposal said. “But what we cannot agree with any instruments or measures that will lead to debt consolidation or a significant increase in the EU budget.”
To protect loans from possible fraud, these four countries call for strong involvement of the European Court of Auditors, the EU Anti-Fraud Office (OLAF) and the European Public Prosecutor’s Office (EPPO).
“We aim to provide temporary and targeted funding through multiannual EU budget and to offer loans on favorable terms to those most affected by the crisis,” the document concluded.
Although the conflicting French-German proposal received initial criticisms from several countries demanding more or less of the fund, analysts say the original proposal is likely to become the basis for a compromise that may co-determine the future direction of the European bloc.
The plan must be approved by all 27 member states, and the European Commission will present its version on Wednesday.
Italy, one of the countries most affected by the coronavirus pandemic, called a proposal by four states disproportionate. According to Italian European Affairs Minister Enzo Amendola, the deep recession calls for “ambitious and innovative proposals”.
“The proposal of four is defensive and disproportionate,” he said, adding that the European Commission must show more courage in creating the proposal.
Title image: German Chancellor Angela Merkel, left, and French President Emmanuel Macron pose for photographers prior to a meeting on the sidelines of an EU summit at the Europa building in Brussels