RPT: REVIEW - Marathon Summit In Brussels Results In Giant $2 Trillion EU Budget, COVID-19 Fund

BRUSSELS (UrduPoint News / Sputnik - 22nd July, 2020) After four days of animosity and tough negotiations, European Union heads of state finally reached an agreement in the early hours of Tuesday on an unprecedented seven-year budget and COVID-19 economic recovery fund that will total 1.82 trillion Euros ($2.09 trillion).

It took until after 05:00 local time (03:00 GMT) on Tuesday morning for the bloc's leaders to finally agree on the terms of the deal. From 2020-2027, the EU's budget will amount to a mammoth 1.074 trillion euros ($1.228 trillion), and leaders also committed to a COVID-19 recovery fund worth 750 billion euros ($862 billion) made up of loans and grants.

The proportion of the recovery fund that would be made up of grants had been a sticking point during the negotiations. Originally, the European Commission called for 500 billion euros of the fund to consist of grants, with the remaining 250 billion euros being made up of loans.

However, the so-called frugal four, comprising of Sweden, Denmark, the Netherlands, and Austria, was joined by Finland in opposing these plans.

These efforts proved to be successful, as the final deal sees 390 billion euros of the recovery fund being given as grants, in what has been seen as a victory for the "frugal four + 1."

Other tensions emerged as Dutch Prime Minister Mark Rutte publicly backed proposals to make access to EU grants contingent on member states abiding by and implementing a set of European values, which led to a clash with Hungarian Prime Minister Viktor Orban, who is seen to be a potential target of the so-called rule of law mechanism.

The eventual deal left this matter vague, with access to funds being subject to "a regime of conditionality," although the form this mechanism will take must be agreed on by the European Union's member states.

Countries across the bloc have already implemented their own domestic recovery plans amid the economic disruption caused by the global pandemic, but this deal could pave the way for Brussels to reassert its authority and exert influence over economic policy in individual member states.

Furthermore, the proposal still needs the support of the European Parliament, and European Commission President Ursula von der Leyen held talks with the head of the parliament, David Sassoli, on Tuesday evening.

Brussels may have made the first step in finally reaching economic consensus, but a long and uncertain road lies ahead.

Italy leaves the negotiating table with the largest sum, having been awarded 28 percent of the bloc's COVID-19 recovery fund. The southern European nation, which became the first European epicenter of the pandemic, will receive 81 billion euros in grants and 127 billion euros in repayable loans, Prime Minister Giuseppe Conte announced on Tuesday.

"Italy comes first for the grants attributed by the EU since we obtain as much as 28 percent of the "Next Generation EU" recovery plan in subsidies and loans, for a total of 209 billion euros. Our country will get more than expected," Tiziana Beghin, the head of delegation in the European Parliament for Italy's 5-Star Movement party, said in a statement.

Beghin expressed her gratitude to Conte for his efforts in ensuring that Italy, which has confirmed more than 244,000 cases of the disease and recorded more than 35,000 deaths since the start of the outbreak, left Brussels with the largest amount.

"We thank Prime Minister Giuseppe Conte for the determination with which he brought home this historic result for our country, the precondition necessary to overcome this economic crisis that arose from the health emergency," the lawmaker added.

Dino Giarrusso, another 5 Star Movement member of European Parliament, also took to Twitter in support of Conte, adding that previous prime ministers have failed in their attempts at gaining benefits from Brussels.

"After prime ministers such as Prodi, Monti, and Berlusconi who have sold off Italy to Europe with choices that have penalized us, we finally have a prime minister who really works in the interests of Italians," Giarrusso said in a quote that was published by the party.

OTHER MEMBERS EXPRESS DISAPPROVAL

The ruling parties in other southern countries, such as Spain and Greece, have also given their backing to the deal. Spanish Prime Minister Pedro Sanchez lauded the agreement, which will give the country close to 140 billion euros in relief.

However, opposition lawmakers in Spain, such as VOX spokesman and member of European Parliament Jorge Buxade, have voiced their disapproval, criticizing the deal for potentially reducing the government's sovereignty and increasing the EU's control over member states.

"Spain's economic and social policy is now in the hands of the European Commission and the Council. It will mean repaying loans until 2058. My oldest son will be 53 years old at this time," the VOX spokesman said on Twitter.

Buxade also warned that funding for the bloc's one-trillion-euro budget will come from individual taxpayers in each EU member state.

"Don't forget that the union's budget is covered by contributions from the member states; that is, from the taxpayers of the member states," the spokesman remarked.

These concerns were shared by a fellow member of the European Parliament, Tom Vandendriessche, who represents Belgium's Vlaams Belang party.

Belgian Prime Minister Sophie Wilmes voiced her support for the budget and recovery fund, but Vandendriessche said that the agreement will give too much power to EU institutions, as well as the leaders of France and Germany.

"Each country will see its contribution to the EU increase and the unelected leadership of the EU, the European Commission of Ursula von der Leyen, will manage gigantic sums that it will borrow on the markets. All the brakes on overspending have been blown. France and Merkel's Germany will decide everything," the Belgian lawmaker told Sputnik.

Vandendriessche slammed the EU for its disjointed response during the pandemic to date, saying that the bloc's leadership has been ineffective throughout the epidemiological crisis.

"While Europe's total ineffectiveness in the coronavirus crisis should mean limiting Brussels's ambitions, the reverse is happening. Since the EU has shown itself incapable of handling anything, let us give it more responsibility. The EU is becoming a real tax prison," the lawmaker said.

In Germany, the head of the AfD's Bundestag faction Alice Weidel also slammed the deal, and in particular Chancellor Angela Merkel, for diverting German citizens' tax contributions to other countries.

"'Historical' is the only nice adjective for this summit. Never before has a head of government fought so long and persistently to be able to give her citizens' tax money to others on such a grand scale as Angela Merkel did to Brussels. Germany's place as the largest net contributor meant that it should have been on the side of the frugal five," Weidel said in a statement, adding that the final grant amount of 390 billion euros was still too high.

European Council President Charles Michel may have triumphantly tweeted "Deal!" in the early hours of Tuesday morning, but the reaction from several political parties across the bloc shows that Brussels still has a long way to go if it wants to reach consensus, which will be particularly difficult in the bloc's highly diverse parliament.

RULE OF LAW MECHANISM TO CAUSE FURTHER ISSUES

The so-called rule of law mechanism, which will see access to funds tied to the implementation of European values, has the potential to cause further headaches for the European Union.

"The European Council underlines the importance of the respect of the rule of law. Based on this background, a regime of conditionality to protect the budget and Next Generation EU will be introduced. In this context, the Commission will propose measures in case of breaches for adoption by the Council by qualified majority," a European Council document, which was published after the deal was signed, read.

Two of the main targets of the proposed mechanism are believed to be Hungarian Prime Minister Viktor Orban and newly reelected Polish President Andrzej Duda, who have been criticized for their approaches to the questions of migration, freedom of the media, and judicial reforms.

The EU itself has threatened to impose sanctions on Warsaw over judicial reforms that the bloc considered to potentially threaten the independence of Polish judges.

During the summit, Hungary's Orban expressed disbelief at the attacks he faced from Dutch Prime Minister Rutte, adding that he did not understand the personal reasons for the criticism he faced.

According to Vandendriessche, the rule of law mechanism is an attempt by Brussels to exert further political control over EU member states.

"Europe is being granted extravagant powers, with the right to scrutinize the internal politics of its member countries, with the support of the dominant leftist and pro-European media. This reform is above all intended to ensure the control of national states by the EU. This is not what the citizens want," the Belgian lawmaker said.

As a result, EU member states are at risk of losing their political sovereignty if they do not uphold the EU's supposed shared values, the lawmaker added.

"Member countries are trapped and lose their sovereignty. They are obliged to contribute and beware! They are threatened with no longer receiving any subsidies and losing their right to vote if they do not respect the 'shared values' defined by von der Leyen and [European Commission Executive Vice-President Frans] Timmermans in Brussels. Look at Hungary or Poland," Vandendriessche commented.

The European Union would not like to see Poland or Hungary leave the bloc, especially after the distraction and cost caused by the Brexit process, which has dragged on for three and a half years since the June 2016 referendum.

However, public discontent with Brussels continues to bubble under the surface in both Budapest and Warsaw. Should the European Union limit access to vital recovery funds, Brussels may find itself in another dispute that could lead to more member states deciding to leave the bloc.