EU leaders are moving towards cutting recovery fund, postpone negotiations until evening

  • 2020-07-20
  • LETA/BNS/TBT Staff

VILNIUS - As EU leaders continue marathon negotiations on the economic recovery fund, the European Council president has on Monday proposed reducing the package's part coronavirus-hit countries would receive as grants they would not need to repay.

The recovery plan submitted for the summit is worth 750 billion euros, including 250 billion euros in loans and 500 billions euros in grants. The countries would not have to repay the grants.

On Monday morning, European Council President Charles Michel said he's proposing reducing the grant part to 390 billion euros and announced a break, according to diplomatic sources. The new plenary session should start no earlier than 5 p.m. Lithuanian time. The negotiations in Brussels have been taking place since Friday.

Sources told BNS that Dutch and Austrian leaders Mark Rutte and Sebastian Kurz made the strongest calls to cut the grant part during the leaders' overnight session.

"Rutte and Kurz remain against everyone else," a well-informed diplomat told BNS early Monday morning anonymously due to the sensitivity of the matter.

The recovery fund would be created on the basis of funds borrowed by the European Commission in the international markets. But the Dutch and Austrian governments do not want to share borrowed funds without strict conditions with countries like Spain and Italy they consider to be too wasteful.

The majority of other leaders say the EU has to demonstrate solidarity in the face of the coronavirus crisis.

Diplomats hope Michel will present on Monday afternoon a detailed updated proposal on the recovery fund's distribution criteria and the separate 2021–2027 budget worth over 1 trillion euros.

Unofficial calculations show that under the Saturday proposals, Lithuania could receive around 2.5 billion euros in grants and ask for additional loans worth around 2 billion euros. If the recovery fund is reduced, Lithuania's share would probably be smaller.

Lithuanian President Gitanas Nauseda said ahead of the decisive round of talks that EU funding for agriculture remains the Baltic states' priority as they want direct payments to farmers to get closer to the EU average faster.

"There are funds we will not agree to be cut and for that reason, even if it happens, we will have counter-proposals that are, first of all, related to bigger agricultural support," Nauseda said.

Under the EU budget proposal updated on Saturday, Lithuania was offered 125 million euros in additional funding to agriculture but the Lithuanian delegation vowed to seek more.

Currently, Baltic farmers receive the lowest direct payments from the EU, standing at around 170 euros per ha, compared to the EU average exceeding 250 euros.

At the start of the summit, Nauseda vowed to demand that such payments be increased to 196 euros as early as next year.

Apart from agriculture, another line changed in the EU draft budget updated on Saturday as Michel agreed to increase funding from 139 to 189 million euros for the so-called Special Transit Zone that is used by Russian citizens travelling via Lithuania to from mainland Russia to the Kaliningrad region.

No changes are planned as yet on other issues important for Lithuania, including cohesion funding and funding for the decommissioning of the Ignalina nuclear power plant.

Lithuania is facing a 24 percent cut to its cohesion funding as its economic rates have approached the EU average. The drop could be slightly reduced by the compensation for emigration-induced losses as Lithuania could receive around 180 million euros.

Under the new financial perspective, 490 million euros could be allocated for the decommissioning of the Ignalina nuclear facility.