Dutch welcome new ideas on EU recovery fund

Germany’s Chancellor Angela Merkel, French President Emmanuel Macron, Finland’s Prime Minister Sanna Marin and European Council President Charles Michel at the start of the first face-to-face EU summit since the coronavirus outbreak, in Brussels, Belgium. (Reuters)
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Updated 19 July 2020

Dutch welcome new ideas on EU recovery fund

  • Deal to revive growth hit by coronavirus still far off as bloc’s leaders negotiate over control of money

BRUSSELS: The Dutch welcomed new proposals on a massive EU stimulus fund on Saturday in a second day of negotiations among the bloc’s leaders though a final deal on how to revive growth stifled by the coronavirus pandemic remained far off.

The talks on Friday were deadlocked over who should control how the money is spent, as Prime Minister Mark Rutte held out against his EU counterparts after 13 hours of negotiations at a summit in Brussels.

With the pandemic dealing many European economies their worst economic shock since World War II, leaders seek to agree on a €750 billion ($856 billion) recovery fund and a 2021-27 EU budget of more than €1 trillion. “I’m doing this for the whole of Europe, because it is also in the interest of Spain and Italy that they emerge from this crisis with strength,” Rutte said, referring to the two EU countries most affected by the pandemic.

Many of the 27 leaders — wearing masks in their first face-to-face meeting since February — had their own demands in negotiations crisscrossing different regional and economic priorities.

But the Dutch position highlighted the deep splits in the bloc, as the executive European Commission seeks a mandate to borrow billions of euros on capital markets for the first time.

Fiscally conservative countries such as Austria, Denmark and Sweden are adamant that any new debt should be strictly policed.

The European Parliament must also approve any deal done by leaders.

Bulgarian Prime Minister Boyko Borissov said that he saw a route to a compromise by involving EU finance ministers in monitoring new debt, rather than just the European Commission.

Senior EU lawmaker Guy Verhofstadt via Twitter rejected involving finance ministers, however, concerned that the parliament might be sidelined. “The recovery fund cannot be a pretext to undermine EU democracy,” he said.

The leaders of France, Germany, the Netherlands, Spain, Italy and the Commission also held talks, meeting in a format once used to discuss Greek debt relief, an issue that dogged the bloc for years.

European Council President Charles Michel, who chaired the summit, then circulated new proposals that tried to resolve the Dutch demands.

“In the end this is a package and there are many more issues to solve. But the proposal on governance as put forward by Michel is a serious step in the right direction,” a Dutch diplomat said in reaction.

“Many issues remain and whether we get there will depend on the next 24 hours.”

The exact size of the new EU budget and how far to use payouts as leverage for reforms, or whether to withhold money from countries that fail to live up to democratic standards, were still to be resolved.

A senior diplomat said: “The key question now is whether . . . we can move on to other issues. There will still need to be a discussion on volume, and that’s before we get into the rule of law.”

Hungary, backed by its euroskeptic, nationalist ally Poland, threatened to veto the whole package over a new envisaged mechanism to freeze out countries flouting democratic principles.

Under the new proposals, the portion of grants in the €750 billion recovery fund would be reduced to €450 billion from €500 billion.

They also call for an “emergency brake” on disbursement of funds, to appease states who want conditions attached to grants and would prefer to see those countries worst affected by the coronavirus crisis take loans.

The proposals would also increase rebates on the multi-year EU budget for Austria, Denmark and Sweden.


Bailout will keep Air France-KLM afloat for less than year: CEO

Updated 21 September 2020

Bailout will keep Air France-KLM afloat for less than year: CEO

  • ‘If we base it upon the past few weeks, it is clear that the recovery in traffic will be slower than expected’
  • Governments are coming under pressure to tie airline bailouts to environmental commitments

PARIS: Bailouts provided to Air France-KLM by the French and Dutch governments will keep the airline flying less than a year, its CEO Benjamin Smith said Monday and evoked the possibility of injecting new capital.
In an interview with the French daily l’Opinion, Smith also warned that calls for airlines to contribute more to fight climate change could be catastrophic for their survival which is already under threat due to the coronavirus pandemic.
When countries imposed lockdowns earlier this year to stem the spread of the coronavirus airlines faced steep drops in revenue that have claimed several carriers.
A number of countries stepped in with support, including France which provided $8.2 billion to Air France and the Netherlands which received a $2.9 billion package.
“This support will permit us to hold on less than 12 months,” said Smith.
The reason is that air traffic is picking up very slowly as many northern hemisphere countries are now fearing a second wave of infections.
“If we base it upon the past few weeks, it is clear that the recovery in traffic will be slower than expected,” according to Smith, who said when the bailout was put together the airline was expecting a return to 2019 levels only in 2024.
Smith said discussions were already underway with shareholders on shoring up the airline group, and steps would be taken before the next regular annual meeting in the second quarter of next year.
“One, three or five billion euros? It is too early to put a figure on a possible recapitalization,” he said.
The airline group had $12.12 billion in cash or available under credit lines.
Major shareholders include the French government with a 14.3 percent stake, the Dutch government at 14 percent, as well as Delta and China Eastern airlines which each hold an 8 percent stake.
Governments are coming under pressure to tie airline bailouts to environmental commitments.
One proposal that has come from a citizen’s convention convoked by President Emmanuel Macron would cost airlines an estimated $3.6 billion.
Smith said the imposition of environmental charges on the industry would be “irresponsible and catastrophic” for Air France-KLM.