Monday

21st Jun 2021

EU agrees €50bn fund for non-euro members

  • Member states found it easier to agree on €100 billion than on €5 billion (Photo: Eurpoean Council)

EU leaders on Friday agreed to double the existing €25 billion fund for troubled non-euro member states and to allocate €75 billion to the International Monetary Fund, after having haggled for three months over energy projects worth €5 billion.

"We agreed on three particular figures: five, 50 and 75 billion euros", Czech Prime Minister Mirek Topolanek said at the press conference at the end of the spring EU council.

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"We agreed on €50 billion. It's a doubling of the amount available to them. If there is a need to help countries which are particularly hit by the crisis, we also put forward €75 billion for the IMF, to enable it to react better in the context of the crisis," he explained.

The €50 billion figure was initially excluded from the draft conclusions Friday morning, which read that the EU would "keep the ceiling for the Union's support facility for balance-of-payments assistance under review."

In the final conclusions, however, EU leaders welcome "the commission's intention to make a proposal for doubling the ceiling for the Union's support facility for balance-of-payments assistance to €50 billion."

According to several diplomatic and EU sources, Austria and the eastern member states pleaded for the precise figure to be mentioned. Germany and France, on the other hand, would have preferred no figure, so as not to give an 'alarmist signal' that the fund is insufficient and other member states need an international bailout.

Speaking later at a press conference, however, French President Nicolas Sarkozy chose to present the top-up as a French initiative. "The effort for our friends from the East has been doubled ... under a French proposal," he said.

Latvia and Hungary have already tapped the fund, leaving it at €15 billion, while Romania is currently also in talks for an EU-IMF loan, estimated at €20 billion. EU sources told this website that even after Romania tapped the fund, there would still be some €10 billion left, suggesting that the bigger share of the loan would come from the IMF.

"Romania's request can be covered by the €25 billion figure and this still gives us quite a big margin. We decided to double the ceiling at €50 billion, but there haven't been any specific requests apart from Romania. But should there be any future request, we wanted to show we are ready," commission president Jose Manuel Barroso said at the press conference.

Worst hit countries still get least energy funding

Paradoxically, it was the lowest figure, that of €5 billion allocated for energy, broadband and agriculture projects, which caused the most strife among member states. It was eventually agreed after Germany got its way and inserted a 2-year deadline for the funding, after which any unspent money would go back to member states.

Although it was designed to increase the capacity of eastern European member states to face new potential gas cuts from Russia, the project list only allocates €310 million of the total €1.5 billion to these countries. Eastern countries were the worst hit when Russia turned off the gas tap for three weeks in January-

Poland also gets an extra €80 million for a liquified natural gas terminal and €150 million together with Denmark and Sweden for a Baltic gas pipe.

The Nabucco pipeline designed to bring Caspian gas to central Europe via Turkey, Bulgaria, Romania, Hungary and Austria is earmarked to get €200 million, despite strong reserves from Germany. Berlin had argued that the project was fully commercial and would not need public funding.

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An investigation into Luxembourg's tax regime has uncovered how the Italian mafia, the Russian underworld, and billionaires attempt to stash away their wealth. The European Commission has put itself on standby amid suggestions changes to EU law may be needed.

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Portugal vs Germany clash on EU corporate tax avoidance

Portugal's taking over the EU presidency puts the tax transparency law for corporations - which has been fought over for years - to a vote in the Council of Ministers. The resistance of the German government has failed.

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