EU recovery fund plan hangs in balance on third day of talks

[webfact]

EU recovery fund plan hangs in balance on third day of talks

By John Chalmers and Gabriela Baczynska

 

President of the European Council Charles Michel (L), Germany's Chancellor Angela Merkel (C), France's President Emmanuel Macron (2nd R) and President of the European Commission Ursula von der Leyen pose during a meeting at the first face-to-face EU summit since the coronavirus disease (COVID-19) outbreak, in Brussels, Belgium July 19, 2020. Francois Walschaerts/Pool via REUTERS

 

BRUSSELS (Reuters) - A European Union plan to breathe life into economies throttled by the COVID-19 pandemic hung in the balance on Sunday as leaders quarrelled over how to carve up a vast recovery fund and what strings to attach for countries it would benefit.

 

After three days of meetings in Brussels, the 27 EU states were still seeking a compromise on the fund after haggling into the evening over moves designed to help haul Europe out of its deepest recession since World War Two.

 

Diplomats said it was not clear whether they would abandon the summit and try again next month, or plough on through the night.

 

On the table is a 1.8-trillion-euro ($2.06-trillion) package for the EU's next long-term budget and recovery fund. The 750 billion euros proposed for the recovery fund would be raised on capital markets by the EU's executive European Commission and funnelled mostly to hard-hit Mediterranean rim countries.

 

European Central Bank President Christine Lagarde said it would be better for the EU leaders to agree an "ambitious" aid package than to have a quick deal at any cost.

 

"Ideally, the leaders' agreement should be ambitious in terms of size and composition of the package ... even if it takes a bit more time," she told Reuters.

 

Lagarde's comments suggested she was relaxed about the possibility of an adverse reaction on financial markets if the summit fails, especially as the ECB has a 1 trillion euro-plus war chest to buy up government debt.

 

European Union leaders may not reach a deal on a coronavirus stimulus plan on Sunday (July 19), German Chancellor Angela Merkel said as marathon negotiations ran into a third day. Francis Maguire reports.

 

A group of "frugal" wealthy north European states have pushed for a smaller recovery fund and sought to limit how the payouts are split between grants and repayable loans.

 

The tense talks, though still shorter that an EU summit in the French city of Nice 20 years ago, have underscored the gulf between the EU's north and south.

 

On Sunday evening, another attempt at reaching a compromise failed. A deal envisaging 400 billion euros in grants - down from a proposed 500 billion euros - was rejected by the thrifty north, which said it saw 350 billion euros as the maximum.

 

A Dutch proposal for higher budget rebates faced opposition over concerns that these changes would hit the EU's flagship plan to come to net-zero greenhouse gas emissions by 2050.

 

"The volume of grants is make or break," one diplomat said, as the leaders continued discussions over dinner.

 

"NO GROCERY"

There were also differences over a proposed new rule-of-law mechanism that could freeze funding to countries flouting democratic principles.

Hungary, backed by Poland, has threatened to veto the package if its disbursement is made dependent on meeting conditions on upholding democracy which Luxembourg Prime Minister Xavier Bettel would safeguard democratic values that were the EU's backbone.

 

"Because Europe is not a grocery where you can choose what you want. Europe is, above all, the values that we protect," he said.

 

For some, it is a critical moment for nearly 70 years of European integration and failure to agree could fuel doubts about the bloc's viability and unnerve financial markets.

 

Greek Prime Minister Kyriakos Mitsotakis called for unity, saying the EU could not afford to look "divided or weak".

 

Italian Prime Minister Giuseppe Conte has accused the Netherlands and its allies -- Austria, Sweden, Denmark and Finland -- of "blackmail".

 

Dutch Prime Minister Mark Rutte's position reflects political realities in his country, where voters resent that the Netherlands is, proportionately, among the largest net contributors to the EU budget.

 

Rutte and his conservative VVD party face a strong challenge from far-right eurosceptic parties in elections next March. ($1 = 0.8752 euros)

 

(Additional reporting by Kate Abnett, Marine Strauss, Tom Sims, Bart Meijer, Toby Sterling, Jan Lopatka, Marton Dunai, Balazs Koranyi, Andreas Rinke and Jessica Jones, Writing by John Chalmers and Robin Emmott in Brussels and Gabriela Baczynska in Warsaw, Editing by Timothy Heritage)

 

-- © Copyright Reuters 2020-07-20

 

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[bartender100]

Opps no UK to bail them out, we spent our COVID-19 money on ourself

[twocatsmac]

Use of terms like “payouts” “packages” “recovery funds” isn’t fooling all European tax payers anymore. 

The poorly governed countries have their hands out every year regardless of constant bailing out by the lame ducks in the photo above. 

 

Only time now before another major contributing  (or its citizens) country follows the UKs lead and wonders why they didn’t leave the EU welfare state earlier.

[worgeordie]

Is the EU ,too big to fail......55555

regards Worgeordie

[robblok]

58 minutes ago, twocatsmac said:

Use of terms like “payouts” “packages” “recovery funds” isn’t fooling all European tax payers anymore. 

The poorly governed countries have their hands out every year regardless of constant bailing out by the lame ducks in the photo above. 

 

Only time now before another major contributing  (or its citizens) country follows the UKs lead and wonders why they didn’t leave the EU welfare state earlier.

Unless changes are made that will happen. I still support the EU don't want to become like the UK. Its better for trade to be in a block and there are still net wins from being in the block. But those weaker poorly governed southern countries should stop begging. 

 

Else the block will end as the better countries that have more fiscal discipline will leave the EU. 

[cantata]

11 minutes ago, robblok said:

Unless changes are made that will happen. I still support the EU don't want to become like the UK. Its better for trade to be in a block and there are still net wins from being in the block. But those weaker poorly governed southern countries should stop begging. 

 

Else the block will end as the better countries that have more fiscal discipline will leave the EU. 

Once again the myth that Italy and Spain (Greece and Portugal a different story) owe their current situation to poor governance surfaces. Both those countries were on a downward trajectory of debt to gdp until the Great Recession struck. Then Germany and to a less extent France forced those nations to take over the debt that the big banks had incurred by foolishly lending money to private real estate interests.. Banks were saved from bankruptcy and liquidation at the expense of the governments of those countries.

As for now, the optimal result would be for those countries to leave the Eurozone but stay in the EU. Then their currencies would genuinely reflect the weakness of their economies. That would make them more competitive economically. But not so oddly, the Germans and other Northern European nations are against this. They want to keep the Euro's value subdued since that makes them more competitive in world markets and even in those poorer nations in the EU.

And the financial contributions of net contributors to the EU is just a small fraction of their GDP. For Germany it's about 0.4% of GDP.

[robblok]

1 minute ago, cantata said:

Once again the myth that Italy and Spain (Greece and Portugal a different story) owe their current situation to poor governance surfaces. Both those countries were on a downward trajectory of debt to gdp until the Great Recession struck. Then Germany and to a less extent France forced those nations to take over the debt that the big banks had incurred by foolishly lending money to private real estate interests.. Banks were saved from bankruptcy and liquidation at the expense of the governments of those countries.

As for now, the optimal result would be for those countries to leave the Eurozone but stay in the EU. Then their currencies would genuinely reflect the weakness of their economies. That would make them more competitive economically. But not so oddly, the Germans and other Northern European nations are against this. They want to keep the Euro's value subdued since that makes them more competitive in world markets and even in those poorer nations in the EU.

And the financial contributions of net contributors to the EU is just a small fraction of their GDP. For Germany it's about 0.4% of GDP.

Not a myth, i have no faith in you as its obvious where you come from given your name.

 

Why is it that we in the north reforms and let our people feel the burden and you guys in the south just keep on begging and let us take the hit. 

 

Small fraction of GDP.. if its that small why not let Italy and Spain pay the same if they could do that they would not have to beg all the time. 

[cantata]

3 minutes ago, robblok said:

Not a myth, i have no faith in you as its obvious where you come from given your name.

 

Why is it that we in the north reforms and let our people feel the burden and you guys in the south just keep on begging and let us take the hit. 

 

Small fraction of GDP.. if its that small why not let Italy and Spain pay the same if they could do that they would not have to beg all the time. 

Very foolish to challenge an assertion. Especially one that is so easily provable.

Spain' Debt to GDP ratio

https://tradingeconomics.com/spain/government-debt-to-gdp

 

Italy's debt to GDP ration

https://tradingeconomics.com/italy/government-debt-to-gdp

 

As for invoking the name of my avatar as some dispositive proof of my national origin...how ridiculous can you get? Just further evidence how political ideology contributes to the paralysis of thought processes.

[robblok]

1 minute ago, cantata said:

Very foolish to challenge an assertion. Especially one that is so easily provable.

Spain' Debt to GDP ratio

https://tradingeconomics.com/spain/government-debt-to-gdp

 

Italy's debt to GDP ration

https://tradingeconomics.com/italy/government-debt-to-gdp

 

As for invoking the name of my avatar as some dispositive proof of my national origin...how ridiculous can you get? Just further evidence how political ideology contributes to the paralysis of thought processes.

Yes im using your name as an indication to where you come from. Definitely not real proof but it gives an idea same with your ideas. Never said it to be 100% proof.

 

But your actually proving yourself that its bad governance. Because the crisus was around 2010 but even after that the debt ratio kept going up. The Dutch debt ratio is now lower as before the crisus. So we did get it lots lower. I just don't see the south doing the same.

 

Our people took the hit and we improved. Is it that bad to expect the south to do the same and NOT to pay for them after we reformed. Why would we work hard and then give it to the south.

 

 

[Brunolem]

24 minutes ago, cantata said:

Once again the myth that Italy and Spain (Greece and Portugal a different story) owe their current situation to poor governance surfaces. Both those countries were on a downward trajectory of debt to gdp until the Great Recession struck. Then Germany and to a less extent France forced those nations to take over the debt that the big banks had incurred by foolishly lending money to private real estate interests.. Banks were saved from bankruptcy and liquidation at the expense of the governments of those countries.

As for now, the optimal result would be for those countries to leave the Eurozone but stay in the EU. Then their currencies would genuinely reflect the weakness of their economies. That would make them more competitive economically. But not so oddly, the Germans and other Northern European nations are against this. They want to keep the Euro's value subdued since that makes them more competitive in world markets and even in those poorer nations in the EU.

And the financial contributions of net contributors to the EU is just a small fraction of their GDP. For Germany it's about 0.4% of GDP.

That's more like it.

 

The euro was a major mistake, save for the Germans and a few others, from the get go.

 

It was obvious that the Southern countries, who had been constantly devaluating their currencies against the DM for decades, would not suddenly become economic powerhouses because of a change of currency.

 

The concerned countries' economies have not changed since 2000, Germany still produces and exports Mercedes, while Greece produces and exports Ouzo.

 

At the end of the year, the economic gap always increases, but Greece is not able to devalue in order to restore the balance.

 

So it has to go through what is called an internal devaluation, a.k.a. austerity program...a sure recipe for more economic pain.

 

Ditto for Italy, Spain and even France, who likes to play tough but whose economy is closer to the one of its Southern neighbors than its Northern ones.

 

The ONLY solution to end this constant state of European crisis would be for a good half of the eurozone members to leave and go back to their former currencies.

[cantata]

15 minutes ago, robblok said:

Yes im using your name as an indication to where you come from. Definitely not real proof but it gives an idea same with your ideas. Never said it to be 100% proof.

 

But your actually proving yourself that its bad governance. Because the crisus was around 2010 but even after that the debt ratio kept going up. The Dutch debt ratio is now lower as before the crisus. So we did get it lots lower. I just don't see the south doing the same.

 

Our people took the hit and we improved. Is it that bad to expect the south to do the same and NOT to pay for them after we reformed. Why would we work hard and then give it to the south.

 

 

What don't you understand about the fact that private banks that lent heavily to the south were bailed out by making those government assume their debts? Why should governments be penalized for the mistakes of the private sector?

[cantata]

What also significant to note is how poorly the Eurozone performed in the wake of the Great Recession compared to the UK  and the USA and even closer to home. Poland and Hungary which have their own currencies bounced out of the Great REcession with amazing rapidity.

The case of Iceland is instructive, too. The UK tried to bully the government of Iceland into assuming responsibility for the its private banks' debts. Apparently, lured by high interest rates, lots of UK citizens had put their cash into said banks. Anyway, Iceland told the UK to go stuff itself. Given that it has its own currency and is subject to no externally imposed  debt limits, Iceland also rebounded rapidly from the Great Recession.

[robblok]

13 minutes ago, cantata said:

What don't you understand about the fact that private banks that lent heavily to the south were bailed out by making those government assume their debts? Why should governments be penalized for the mistakes of the private sector?

You dont think those governments benefitted from the private sector and that they were obliged to check the private sector to make sure this did not happen (check your banks). 

 

Again i show you how the Dutch also went up in debt and then back down again because we reformed. What don't you understand about reform and stop playing the victim. Bailed you out enough. 

 

But lets take 2014 for example you see that that is about the highest point for both the Dutch and Spain. After that the Dutch went down almost 20% while went down a mere 5%. So that shows who reformed and changed and who did not. Same goes for Italy at the height way after the crisis they did not go down in debt or reform. 

[cantata]

2 minutes ago, robblok said:

You dont think those governments benefitted from the private sector and that they were obliged to check the private sector to make sure this did not happen (check your banks). 

 

Again i show you how the Dutch also went up in debt and then back down again because we reformed. What don't you understand about reform and stop playing the victim. Bailed you out enough. 

 

But lets take 2014 for example you see that that is about the highest point for both the Dutch and Spain. After that the Dutch went down almost 20% while went down a mere 5%. So that shows who reformed and changed and who did not. Same goes for Italy at the height way after the crisis they did not go down in debt or reform. 

Nonsense.

I don't know what you're on about re government benefits from banks. Foreign banks made foolish loans to the private sector in Spain. They didn't practice due diligence. Why should the government sector be compelled to bail out private banks?

Spain's economy was devastated because of the harsh conditions imposed by the EU. BAiling out the banks was hugely damaging. What harsh conditions were imposed on the Netherlands? What would the recovery of the Northern European nations have looked like if they had to assume responsibility for their banks' malfeasances? 

 And if Spain, like Poland, Hungary, and Iceland had its own currency, it would have been much better able to recover.

And I see that you're still sticking with that nonsense that my use of "cantata" as name is somehow proof of my national originals. Doesn't speak well of how you arrive at conclusions.

[JonnyF]

Should have remained a trading bloc. I'm so glad the UK doesn't need to be a part of these discussions and subsequent donations.

 

When Remainers ask what are the benefits of leaving they only need to read this article. 

 

It would appear the British electorate are not as stupid as was portrayed. 

[robblok]

3 minutes ago, cantata said:

Nonsense.

I don't know what you're on about re government benefits from banks. Foreign banks made foolish loans to the private sector in Spain. They didn't practice due diligence. Why should the government sector be compelled to bail out private banks?

Spain's economy was devastated because of the harsh conditions imposed by the EU. BAiling out the banks was hugely damaging. What harsh conditions were imposed on the Netherlands? What would the recovery of the Northern European nations have looked like if they had to assume responsibility for their banks' malfeasances? 

 And if Spain, like Poland, Hungary, and Iceland had its own currency, it would have been much better able to recover.

And I see that you're still sticking with that nonsense that my use of "cantata" as name is somehow proof of my national originals. Doesn't speak well of how you arrive at conclusions.

No im not sticking with it if you say its not true its not true. I don't know better then you.

 

Because governments are also responsible for checks. 

 

But you havent come back to me why the Netherlands got a 20% debt lowering and Spain only 5%. That was WAY after your devastating bailout. Shows bad governance. 

[robblok]

5 minutes ago, JonnyF said:

Should have remained a trading bloc. I'm so glad the UK doesn't need to be a part of these discussions and subsequent donations.

 

When Remainers ask what are the benefits of leaving they only need to read this article. 

 

It would appear the British electorate are not as stupid as was portrayed. 

That is probably why the pound is not recovering like the Euro ????

 

But your right these discussions are crazy and so are the donations to the South. 

[Baerboxer]

3 hours ago, twocatsmac said:

Use of terms like “payouts” “packages” “recovery funds” isn’t fooling all European tax payers anymore. 

The poorly governed countries have their hands out every year regardless of constant bailing out by the lame ducks in the photo above. 

 

Only time now before another major contributing  (or its citizens) country follows the UKs lead and wonders why they didn’t leave the EU welfare state earlier.

 

The bailouts, grants, donations, funding etc etc etc are the price Germany and France have to pay to ensure they can "lead Europe".

 

Only those whose money is being spent, including Germany, Austria, Netherlands, Denmark etc are getting fed up with continuous handouts and zero change.

[Baerboxer]

1 hour ago, cantata said:

Very foolish to challenge an assertion. Especially one that is so easily provable.

Spain' Debt to GDP ratio

https://tradingeconomics.com/spain/government-debt-to-gdp

 

Italy's debt to GDP ration

https://tradingeconomics.com/italy/government-debt-to-gdp

 

As for invoking the name of my avatar as some dispositive proof of my national origin...how ridiculous can you get? Just further evidence how political ideology contributes to the paralysis of thought processes.

 

Interesting charts. 

 

Can you also tell us, for Spain and Italy, which years were they net contributors to the EU budget and which years they were net takers out over the same period?

[JonnyF]

51 minutes ago, robblok said:

That is probably why the pound is not recovering like the Euro ????

 

But your right these discussions are crazy and so are the donations to the South. 

I suggest you read up on the many benefits of a weak currency. There is a reason countries deliberately devalue theirs.

 

It seems like you're starting to come round to see the disadvantages of EU membership though. It took you 5 years to realize Prayut wasnt good for Thailand. I predict by 2025 you will have worked out that the EU is not good for Holland.

[englishoak]

Germany and France should pay in double, Holland Denmark and Austria another 30%... let off Italy Spain & Greeces debts and up the funding to the other deficit contributers until they all have parity with the richer ones... thats what the socialist state of the EU wants after all... thankfully without the UK... Byeeeee suckers.

[welovesundaysatspace]

2 hours ago, robblok said:

Not a myth, i have no faith in you as its obvious where you come from given your name.

 

Why is it that we in the north reforms and let our people feel the burden and you guys in the south just keep on begging and let us take the hit. 

 

Small fraction of GDP.. if its that small why not let Italy and Spain pay the same if they could do that they would not have to beg all the time. 

I don’t think a bodybuilding fisherman had much clue about economics, so maybe this isn’t the right topic for you. 

[vogie]

3 minutes ago, welovesundaysatspace said:

I don’t think a bodybuilding fisherman had much clue about economics, so maybe this isn’t the right topic for you. 

Wow, the europhiles are revolting, who'd have thought. ????????

[welovesundaysatspace]

1 minute ago, vogie said:

Wow, the europhiles are revolting, who'd have thought. ????????

I know you’re very obsessed about the EU and seeing “europhiles” everywhere. Had you for a moment relaxed a bit and read the topic before letting yourself getting triggered again, you wouldn’t look like a fool now. 

[nauseus]

Great to see so much onity in the Onion!

[nauseus]

8 minutes ago, welovesundaysatspace said:

I know you’re very obsessed about the EU and seeing “europhiles” everywhere. Had you for a moment relaxed a bit and read the topic before letting yourself getting triggered again, you wouldn’t look like a fool now. 

He read it. I read it. Even the posters are revolting within.

[Andrew65]

This is additional to the 1 trillion Euros of Target 2 debt?!

Edited July 20, 2020 by Andrew65