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Brussels: Difficult Budget Negotiations on Angela Merkel’s 66th Birthday

For months, the distance between the heads government and heads of state of the 27 remaining European Union member states was hundreds of miles. Today, it will shrink to 5 feet, as they are heading to Brussels for their summit.

Chancellor Angela Merkel has had easier birthdays in her life. On her 66th one, duty calls in Brussels. Her popularity within Germany, that has skyrocketed since the Corona crisis commenced, will not help her much when the bargaining begins. What might help her is the fact that Germany is the largest contributor in the E.U., by far. Her position as President of the Council of the European Union is another trump card.

Worst Idea Ever?

Even more importantly, Mrs. Merkel’s advanced negotiation skills might prove to be helpful on this big day. The European Union’s budget for several years and the Corona recovery fund will be discussed. All in all, this is about distributing more than 1,824 billion Euro (2,077 billion U.S. Dollars or 1,653 billion Pounds Sterling).

The E.U. budget until 2027 amounts to 1,074 billion Euro (1,223 billion Dollars or 973 billion Pounds), the Corona recovery fund to 750 billion billion Euro (854 billion Dollars or 680 billion Pounds). Negotiating both items at once is either the worst idea ever, or the best one, but it will not make things easy.

‘Hard Work’ Expected

Meeting in person for the first time since Corona started turning the world into minced meat is important today. Stalemates in the negotiations might be dissolved in two-way or three-way consultations in between. The calculators everyone will definitely bring along are probably less important than psychological warfare, on this big day in Brussels.

Charles Michel, the permanent Council President, told the heads of government and heads of state an agreement was unalterable when he invited them to Brussels. He said they needed to expect “hard work”. Michel is hoping for a good compromise, whatever it might look like.

Commission to Go in Debt

The modalities of the 750 billion Euro Corona recovery fund alone had lead to arguments within the E.U.. While Chancellor Merkel wanted to give the aid funds away as contributions, others, including Austria’s Chancellor Sebastian Kurz, insisted on distributing the money in the form of repayable loans.

Now two thirds are supposed to be send to countries in need as grants. Spain and Italy, the two countries that were hit the hardest by Corona during the pandemic’s first stage, and their economies will benefit. For the first time ever, the E.U. Commission will go in debt, in order to be able to cover it all. The loans are supposed to be repaid from 2026.

Once and if there is an agreement, it will be the E.U. Parliament’s task to approve the budget and the Corona recovery fund. For now, the big question is: How far will the heads of state and heads of government get? Their visit to Brussels is not a sightseeing trip. That’s for sure.

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