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.


Creditors take action against Al Jaber in decade-long saga

Updated 20 min 26 sec ago

Creditors take action against Al Jaber in decade-long saga

  • The downturn in the Gulf construction sector has triggered a number of corporate restructurings as companies are forced to reschedule debt, raise fresh borrowing or enter insolvency protection

DUBAI:Creditors have started to enforce claims against Abu Dhabi-based Al Jaber Group, in a dispute triggered by a construction downturn in the UAE more than a decade ago.

Al Jaber, a contractor with interests across a range of sectors, has struggled since building up debt in the wake of a UAE real estate crisis and began talks with creditors in 2011.

Abu Dhabi Commercial Bank, which is working as restructuring and security agent, said in a document dated Sept. 21 which was seen by Reuters, that it had instructions from the majority of creditors to proceed with claims against Al Jaber.

A representative for Al Jaber did not immediately respond to a request or comment. ADCB declined to comment.

The move follows delays in restructuring agreements, under which Al Jaber was to appoint a new board and sell companies and assets such as the Shangri-La hotels in Dubai and Abu Dhabi.

In exchange, creditors had agreed to extend the maturity of a 5.9 billion dirhams ($1.61 billion) loan, cut interest rates, and provide additional revolving debt.

The initial enforcement action now being pursued by creditors includes the “acceleration and demand for payment of amounts outstanding” under the previously agreed debt restructuring, a source familiar with the matter said.

Enforcement will also allow creditors to claim against Al Jaber’s chairman under a 4.5 billion dirham loan to the company.

Several UAE companies have sought to extend debt maturities or agree better terms in recent years to avoid defaults, after an oil price crash hit energy services and construction.

The coronavirus crisis has added to the strain and Arabtec Holding, the UAE’s biggest listed contractor, this week will discuss options including dissolution after the pandemic hit projects and led to additional costs.

Meanwhile, Dubai-listed construction firm Drake & Scull is working to reach an agreement with its creditors in an out-of-court process.

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