PM backs Commission’s recovery fund proposal

Greece fully supports the European Commission’s proposal for a Recovery Fund to tackle the fallout of the coronavirus pandemic, Prime Minister Kyriakos Mitsotakis on Friday told his European Union peers during a summit by teleconference, which did not produce a final agreement although European Council President Charles Michel reported “emerging consensus” on some topics. 

Referring to a historic opportunity, Mitsotakis described the fund, which has a projected budget of 750 billion euros, as “a very good starting point.” “It must not drop below that,” he said, warning of the potential risks of a watered-down plan which would not address the significant impact of the pandemic on European economies.

He gave the example of Greece, which experienced a deficit of 9.1% at the peak of its financial crisis in 2011, noting that such extreme economic turmoil leads to social upheaval and the rise of populism. EU leaders should be prepared for very serious repercussions if the final response does not have the size and impact to effectively tackle the problem, he said. 

According to sources close to the premier, Mitsotakis stressed that the distribution ratio should not change either, noting that markets have already factored in the original proposal and that “anything different will create a serious problem.” 

According to the original proposal by the EC, Greece would get 32 billion euros of the new recovery fund, of which 22.5 billion would be grants and 9.4 billion would be loans. 

Greek government sources are cautiously optimistic that a final agreement will be reached by the end of July, though it is expected that at least two summits will be required. 

During the video conference, European Commission President Ursula von der Leyen defended the “allocation key” referred to in the EC’s proposal, which would determine how the EU money is distributed to countries suffering the worst economic effects of the coronavirus. 

In comments after the conference, Michel said it was “an occasion to observe that on different points there is an emerging consensus, which is very positive. But at the same time, we don't underestimate the difficulties.” He said he expected a “physical summit” in mid-July.