EU row: Frugal four hit back at Macron and Merkel’s coronavirus plan – ‘It will backfire!’

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France and Germany made a groundbreaking proposal this week, as Emmanuel Macron and Angela Merkel unveiled a £448billion European recovery fund. The proposal was an attempt to break the impasse threatening the European Commission, which is stuck between poorer southern states hit hardest by coronavirus, like Italy and Spain, and wealthy northern states that reject collective debt.

In a major concession, Mrs Merkel, who had previously rejected the idea of nations sharing debt, said the European Commission should raise money for the fund by borrowing on the markets, which would be repaid gradually from the EU’s overall budget. 

But the so-called frugal four states of Denmark, Austria, Netherlands and Sweden, have rejected the proposal and are already working on a counter-attack sparking fears of a collapse in relationships within the Brussels bloc. 

Speaking to France24, Christopher Dickey, foreign editor of The Daily Beast, claimed there will be a lot of resentment if the frugal four go ahead with their plan to stop Merkel and Macron. 

He said: “Let’s look at the frugal four, we’re talking about pretty small countries here. What’s the population of Austria? I think it’s not much bigger than New York City.

“I think Sweden, another of these countries, what’s its population? 10 million or something like that?

“The Netherlands is a big bigger of course, but these are small countries. And I think one of the questions that the frugal four are raising for the rest of Europe, particularly if they’re up against France and Germany and Italy and Spain, is why do they get a veto?

“Why do they have this kind of power in the European Union? That’s the way it’s been structured for a long time.

“And I don’t expect that will change but I think that this could backfire against them and there will be a lot of resentment if they try to hold firm on this and stop this from going forward.”

A leading candidate to succeed the German Chancellor also warned the European Union must be careful not to become a “transfer union” in which richer member states are asked to bankroll their poorer peers.

Friedrich Merz, a lawyer and former leader of the parliamentary faction of Merkel’s Christian Democrats (CDU), told Reuters the EU was walking a “very fine line” with financial rescue packages now under discussion.

He was referring to a proposal made by France and Germany for a 500 billion euro ($548 billion) Recovery Fund that would offer grants to EU regions and sectors hit hardest by the coronavirus pandemic.

Merz said that when, as a member of the European Parliament and Germany’s Bundestag, he had agreed to Economic and Monetary Union (EMU) he promised voters that it would not become a European transfer union.

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“I feel bound by this promise – also in order not to give the opponents of Europe arguments that can be misused in the next federal election campaign,” he told Reuters in the interview published on Thursday.

Merz’s comments highlight the wariness in Merkel’s party about the Recovery Fund proposal she has put forward together with French President Emmanuel Macron. The opposition Free Democrats and the Alternative for Germany (AfD), a far-right party, oppose the plan.

Merz welcomed the initiative and said Germany had an interest in a functioning European internal market.

“But the devil is in the detail,” he added, calling for checks to the proposal for the European Commission to borrow money on behalf of the whole EU, in order to make sure it is compatible with EU law.

“If necessary, the treaty must be amended,” he said.

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