'Starting point': EU's frugal members cool on recovery plan

Austria, the Netherlands, Denmark, and Sweden want emergency help for countries badly hit by the coronavirus to take the form of one-off loans

VIENNA, Austria – Worried that help for economies devastated by the coronavirus could be handed out too generously, a group of European Union (EU) members on Wednesday, May 27, gave a cool reception to a massive aid plan from Brussels.

Austrian Chancellor Sebastian Kurz said that the European Commission's proposed 750-billion-euro coronavirus recovery plan was no more than a basis for discussions.

"It is the starting point for the negotiations," he said in a statement, adding the amount and the ratio between grants and loans needed to be discussed.

Austria, along with the Netherlands, Denmark, and Sweden, belongs to the self-proclaimed "frugal four" who want emergency help for badly affected countries to take the form of one-off loans "on favorable terms" which must be agreed within two years.

Hours after Kurz, Denmark's government issued a similarly-worded statement.

"Today's proposals mark the beginning of negotiations," Foreign Minister Jeppe Kofod said in a statement sent to Agence France-Presse (AFP).

"We will fight for Danish interests. However, we recognize that – in the end – we need to find a compromise that is acceptable to all. It is not going to be easy."

Sweden also expressed dismay over the size of outright grants in the overall package.

"Sweden has all along pushed for the fund to be focused on loans, which provide a stronger incentive for the money to be used efficiently," Prime Minister Stefan Lofven said in a statement sent to AFP.

Earlier Wednesday, European Union chief Ursula von der Leyen proposed a recovery fund worth 750 billion euros for Europe and urged skeptical member states to back it.

If passed, the proposal would be the biggest EU stimulus package ever.

Officially called "EU Next Generation," the plan comes at the urging of Italy and Spain, Europe's first victims of the coronavirus outbreak that are too burdened with debts to rebuild their economies alone.

If member states accept the deal as drafted, Italy would receive 81.8 billion euros in direct aid over the next few years, and 77.3 billion euros would go to Spain.

"It is positive to note that the payments from the reconstruction fund should be limited in time and that it is ensured that this will not lead to a permanent debt union," Kurz acknowledged.

He reiterated Austria supported loans "out of responsibility toward our taxpayers."

The "frugal four" on Saturday, May 23, presented their own proposal for post-coronavirus economic recovery, restating their rejection of any jointly-issued debt instruments.

Italian Prime Minister Giuseppe Conte meanwhile hailed the EU proposal as "an excellent sign from Brussels."

France, a key backer, said it hoped for agreement by early July but expected "difficult" negotiations with "frugal" countries over the terms. – Rappler.com