EU ‘frugals’ formally oppose Macron-Merkel plan

Above, people sit at the terrace of Cafe Gavlen after it reopened in Copenhagen on May 18, 2020. (AFP)
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Updated 24 May 2020

EU ‘frugals’ formally oppose Macron-Merkel plan

  • Austria, the Netherlands, Denmark and Sweden, wants emergency help for badly affected countries to take the form of one-off loans

VIENNA: EU member states Austria, Sweden, Denmark and the Netherlands stated their opposition on Saturday to a French-German plan for a €500 billion ($545 billion) coronavirus recovery fund that would issue grants, calling for a loans-based approach instead.

French President Emmanuel Macron and German Chancellor Angela Merkel made the surprise proposal on Monday to set up a fund that would offer grants to EU regions and sectors hit hardest by the pandemic.

The idea of grants, however, is anathema to the EU’s self-styled “frugal four,” who generally oppose big spending and fear the proposal will lead to a mutualization of member states’ debt.

“We propose to create an Emergency Recovery Fund based on a ‘loans for loans’ approach,” the four countries said in a so-called “non-paper” outlining their position to other member states and released by Austria.

The two-page document listed principles they wanted the fund to adhere to, including “not leading to any mutualization of debt” and that it be of a “temporary, one-off nature with an explicit sunset clause after two years.”

Paris and Berlin, whose agreements often pave the way for broader EU deals, proposed that the European Commission borrow the money on behalf of the whole EU and spend it as an additional top-up to the 2021-2027 EU budget that is already close to €1 trillion.

The European Commission is to present its own proposal for a recovery fund linked to the EU’s next long-term budget on May 27 and said it welcomed the initiative from France and Germany.

But the document from the “frugal four” said the Commission predicts member states will suffer an “unprecedented economic contraction in 2020.”

“Additional funds for the EU, regardless of how they are financed, will strain national budgets even further,” they said.


Decreasing purchasing power pushes Turks toward ‘Syrian gold’

An employee displays gold bars at a Korea Gold Exchange shop in Seoul on July 30, 2020. Virus uncertainty combined with China-US tensions has sent gold soaring nearly 30 percent this year. (AFP)
Updated 15 min 21 sec ago

Decreasing purchasing power pushes Turks toward ‘Syrian gold’

  • Economist Umit Kumcuoglu said the increasing use of lower-alloy “Syrian gold” mainly derives from the need to preserve status and tradition, and would not produce a significant impact on the local economy because it was not a counterfeit product

ANKARA: The escalating price of gold in Turkey, in tandem with the global market and the decrease of purchasing power, has led to an influx of lower quality products from Syria.
One, an imitation known as “Syrian gold” due to its popularity with Syrian jewelers, has gone mainstream, having emanated from the jewelry markets of the southern city of Hatay on the Syrian border.
One gram of gold currently costs 437 lira ($62) in Turkey, up by almost two-fifths since January. Having reached near unaffordable levels, the prices have pushed people to turn toward metals with lower values for things such as wedding ceremonies, where pinning 22-karat gold coins and sets of gold jewelry on couples is a Turkish tradition.
Economist Umit Kumcuoglu said the increasing use of lower-alloy “Syrian gold” mainly derives from the need to preserve status and tradition, and would not produce a significant impact on the local economy because it was not a counterfeit product.
“In southeastern tribes, buying gold for wedding ceremonies is an established tradition, and people are inclined to continue this practice amid decreasing purchasing power due to the coronavirus disease outbreak and devaluation conditions in the country,” he told Arab News.
However, according to Kumcuoglu, the ongoing economic challenges, and especially skyrocketing inflation, could push some people to produce counterfeit gold in the future.
Turkey’s central bank became the world’s biggest official-sector buyer of gold in June, according to International Monetary Fund figures. In a bid to support the Turkish lira amid currency concerns, the bank increased its reserves by 890,000 ounces to a record level of 21.28 million in May.
As per the figures published by the World Gold Council, total central bank gold purchases were 139 tons in the first four months of 2020, with the lion’s share of these, 111 tons, coming from Turkey.