EU leaders received a new “negobox” for next 7-year budget

Pushing for a deal, EUCO President Charles Michel offers €390bn in grants and €360bn - loans

After four-day marathon on the budget and the fund to rebuild the economies affected by the pandemic, on Monday evening, Charles Michel, President of the European Council, said cautiously, but with dose of hope, that a deal is possible and handed to EU27 leaders the next portion of changes in his newest negotiating box proposal. In it, the New Generation EU recovery fund offers €390bn in grants and €360bn - loans for a total recovery fund envelope or €750bn.

At 7pm, the President of the European Council made a brief statement before the cameras in the Europa building. I am going to send my new proposal to all the leaders, President Michel stated, noting “We have worked very hard and this proposal is the fruit of lots of collective work”.

I know that the last steps are always the most difficult but I am convinced that an agreement is possible, he added.

Coming to the sitting on Monday EC President Ursula von der Leyen was also pretty clear, saying: “We need an agreement that gives us the means to overcome the crisis and prepare Europe for the future”.

The plenary meeting for the day, which was originally scheduled for 4pm and then postponed several times, had not yet begun at 8:30pm. After the end of the previous session on Monday at 6:30 am, very few of the leaders actually had a rest. Most of them, together with their teams, continued the sleepless hours over the calculations - where and how much can be ceded in discussions.

In his newest proposal Michel kept the recovery fund overall size at €750bn, as massive resources are necessary to help the troubled economies from the South. Countries like Italy and Spain have been hardest hit by the pandemic, suffering  prolonged lockdowns that affected the life and practically stopped many industries.

The new “negobox” foresees that the funds borrowed may be used for loans up to amount of €360 bn in 2018 prices and for expenditure up to an amount of €390bn. The repayment shall be scheduled in accordance with the principle of sound financial management so as to ensure the steady and predictable reduction in liabilities until 31 December 2058. Amounts not used for interest payments as foreseen will be used for early repayments before the end of MFF 2021-2027, provided that new own resources have been introduced, the draft reads.

The amounts under New Generation EU for individual programmes shall be  for Recovery and resilience Facility  €672.5 bn of which loans - €360bn, grants €312.5bn; ReactEU €47.5bn, InvestEU - €2.1bn, Rural development - €7.5bn, Just Transition Fund - €10bn, RescEU €1.9bn. The volume of the MFF remains the same, as he proposed it on 10 July - €1.0743tn and small shifts inside it.

Whether the new proposal will be acceptable for the so-called ‘frugal four’- the Netherlands, Sweden, Denmark and Austria, now already five with Finland in their ranks, is not known.

No one out of the many options that Michel put on the table over the past days, the “frugals” did not like anything, but were bargaining for every penny, as well as higher rebates for their countries.

The rule of law conditionality about which these countries insist could be the other big stumbling block that could be a reason the talks to come to naught again.

At a press conference on Sunday Hungarian Prime Minister Viktor Orbán explained to EU correspondents that “if we fail to come to an agreement on issues in dispute, that will be because of Holland”. He said that the Netherlands would like to introduce a mechanism which monitors the disbursement and utilisation of EU funds, in particular, in the case of the Southern countries. He underlined that this is an entirely new mechanism also in connection with the rule of law.

Regarding the rule of law, he said its existence and guaranteeing its existence are of fundamental importance for all 27 Member States. He also pointed out that the introduction of an entirely new mechanism requires the amendment of the treaties of the EU. There is no need for a new mechanism, but we are ready to debate it, PM Orbán stated adding that “carrying out this job, however, takes more than just a few casual words,it requires a lot of hard work and deliberation”.


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