EU Faces Difficulties Over Establishing 1,032 Trillion Economic Recovery Fund... 'Negotiations Extended by One Day'

Insistence on Loan-Based Support Instead of Subsidies in the Netherlands and Others
Disagreements Persist Despite Preconditions Like Respect for Democratic Values

[Asia Economy Reporter Naju-seok] The 27 member states of the European Union (EU) have yet to reach a consensus on the establishment of a 750 billion euro (1,032 trillion won) economic recovery fund for the novel coronavirus disease (COVID-19). The EU leaders have decided to extend their schedule by one day to continue the meeting.

[Image source=AP Yonhap News]

On the 18th, EU leaders held a summit in person for the first time since COVID-19 in Brussels, Belgium. At this meeting, they negotiated over the 750 billion euro economic recovery fund and the 1.074 trillion euro 2021?2027 EU long-term budget plan.

Originally, the EU leaders planned to seek a consensus through two days of discussions, but as talks hit a deadlock, they decided to hold an additional meeting on the 19th.

Earlier in April, the EU leaders agreed to establish a large-scale economic recovery fund linked to the EU long-term budget. While there is no disagreement on the European Commission borrowing money from financial markets to support member states severely affected by COVID-19, there are significant differences among member states regarding the method of disbursement. The European Commission proposed that out of the 750 billion euro fund, 500 billion euros be in the form of grants and 250 billion euros as loans.

[Image source=AP Yonhap News]

Regarding the grant method, countries such as the Netherlands, Austria, Sweden, Denmark, and Finland oppose it due to concerns about the emergence of large-scale joint debt. They argue that the funds should be in the form of loans rather than grants, and that economic reforms in the recipient countries should be a prerequisite for receiving support.

Additionally, there are disagreements on linking fund support to respect for democratic values and responses to climate change. For example, Hungary has stated that it would reject the economic recovery plan if compliance with democratic standards is made a condition for fund support.

Due to these significant differences, if no consensus is reached at this summit, there is speculation that another summit may be held in a few weeks.

This content was produced with the assistance of AI translation services.