ZAGREB, April 22, 2020 – Prime Minister Andrej Plenković on Tuesday conducted a video call with European Council President Charles Michel to discuss the coming virtual summit of heads of state and government of EU member states.
“I spoke with Charles Michel about preparations for the European Council meeting on Thursday, the priorities of the new EU budget, plans for recovery from the consequences of COVID-19 and preparations for the Zagreb summit during Croatia’s presidency in the latest circumstances,” tweeted the premier of Croatia which is currently holding the rotating presidency of the Council of the EU.
The leaders of EU member states that comprise the European Council, presided by Michel, will try to reach an agreement during a video conference on Thursday regarding a recovery strategy from the consequences of the pandemic and building resilience to the crisis by gradually activating measures to relaunch economic activities which were on the most part suspended because of the pandemic.
The leaders are expected to present the European Commission with guidelines on the future Multiannual Financial Framework (MFF) for the period 2021 to 2027 which Commission President Ursula von der Leyen has underlined as the key element to Europe’s response to the fallout of the crisis on the economy.
The Commission is expected to release a new proposal for the MFF, seeing that the current proposal for the seven-year budget can no longer be the basis for debate considering the recent dramatic developments.
In May 2018 while the Commission was headed by Jean-Claude Juncker, the proposed budget amounted to €1135 billion or 1.114% of the Gross National Income (GNI) of the 27 member state. That proposal foresaw decreased funds for the cohesion and agriculture policies.
Some northern EU member states were strongly opposed to that proposal and called for the budget to be even smaller and that it be limited to 1% of GNI.
Now, in these circumstances, it seems that there is some chance for a larger budget to be agreed to and more funds for the cohesion envelope which is exceptionally important for Croatia and some other member states, who are bigger recipients than contributors to the European budget.
In addition to the MFF being mentioned as a key element in responding to the crisis, there is also talk of a recovery fund. It is still not known what share of the MFF would be earmarked for the recovery fund nor how it would be financed.
The key issue that EU leaders need to find an answer to is whether to jointly bear or to share the cost of loans.
German Chancellor Angela Merkel on Monday expressed her willingness for the Commission to take a loan on financial markets to finance rescue measures and for the European budget to serve as collateral. Merkel said that she can imagine joint bonds, calling on Article 122, Paragraph 2 of the Treaty on the Functioning of the European Union.
That article stipulates: “Where a Member State is in difficulties or is seriously threatened with severe difficulties caused by natural disasters or exceptional occurrences beyond its control, the Council, on a proposal from the Commission, may grant, under certain conditions, Union financial assistance to the Member State concerned.”
Until now Germany had always been opposed to joint loans.
The EU is divided in its opinion on joint financing between northern member states headed by the Netherlands which is sharply opposed to the idea and southern member states that in any case have problems with high public debts like Italy and see this is a way out of the crisis.
Spain has proposed a fund amounting to €1500 billion which would be granted to member states in difficulties. The funds would be obtained through a joint loan on financial markets while the basic criteria to be granted assistance would be the extent the Gross Domestic Product has decreased and the rate unemployment has increased.
As far as Croatia and other member states that are not in the euroarea are concerned, the most important thing is to agree to an inclusive approach so that there is no distinction between member states in the euroarea and those that aren’t s and that all member states have and equal chance of recovery.
EU leaders also need to agree on a fiscal package for short-term assistance for the economy which was agreed to some ten days ago by EU finance ministers and is valued at €540 million.
It is also expected that EU leaders will discuss an exit strategy related to gradually relieving and coordinating measures introduced to curb the pandemic.
More news about Croatia and the EU can be found in the Politics section.
