Coronavirus DK: EU recovery package – the ugly sides

On the day after the EU agreement, the more critical analyses appeared. Denmark’s annual contribution to the EU for the relief package and the budget in the coming 7-year period will rise from DKK 19.7 billion ($3 billion) to DKK 24.2 billion ($3.7 billion). PM Mette Frederiksen said it was necessary because of the coronavirus crisis and Brexit. Was the deal worthwhile for Denmark? And for the EU?

Macron, Merkel and others approve the deal. Photo: John Thys/Pool © Scanpix.

Strategy of “miserliness”
Columnist Lars Trier Mogensen emphasizes Frederiksen’s role in the Frugal Four as negotiating for the least possible expense for Denmark (DK). That is, of avoiding joint debt and then minimizing the amount when it couldn’t be avoided. The position goes against social democratic values of generosity and solidarity with less fortunate partners that Frederiksen’s party advocates on the domestic front. It resembles the position of the preceding right-wing government that the Danish Social Democrats criticized, as well as Germany’s earlier insistence on austerity for Greece after the financial crisis. 

But domestic politics trumps international collaboration. That is the perpetual problem and paradox of the EU. The state leaders’ own constituencies reward them not for giving priority to the common good but for being selfish and cheap. The coronavirus crisis has strengthened EU skepticism as some countries experienced catastrophes in their healthcare systems and others closed borders to protect themselves from the spread of the pandemic. 

Frederiksen and her allies succeeded in reducing the amount of aid that the other countries wanted to give southern Europe, and she succeeded in portraying herself as standing up to demands from EU bureaucrats. She appealed to the EU skeptics in the Danish People’s Party, from which the Social Democrats have taken voters recently because of their stricter policies on immigration and refugees. It is a policy of isolationism and “Denmark first,” says Trier Mogensen, and the overall result is that the EU will be weaker because it will take longer for Italy and Spain to recover from the crisis. 

Capitulation to authoritarianism
Marlene Wind, Professor of Political Science and leader of the Center for European Politics at the University of Copenhagen, places a different emphasis on the compromise. She sees the EU’s leaders’ relinquishment of the requirements for democratic principles and institutions in Hungary and Poland as a betrayal of the Union’s founding principles (DK). The two countries threatened to veto the recovery package if their autocratic tendencies were subject to immediate sanctions and succeeded in obtaining a more complicated review process. Hungary’s emergency law, for example, allows PM Viktor Orban to circumvent parliament and issue decrees, and it has not been discontinued in June as planned. . 

The agreement could thus be celebrated by both those who favored a strengthened union and those who were critical of it. The lesson for Wind, as for Trier Mogensen, is that money is more important than principles. The deal means that the EU will no longer be able to criticize other countries for undemocratic practices and violations of human rights. 

“What is it actually that we agree on, if not democracy?” asks Wind. “Putin and Erdogan and the Chinese will laugh about our autocrats when we criticize them: ’You can’t tell us that judges can’t be jailed and the press can’t be censored when you can’t control your own members.’”

Coronavirus DK: Denmark approves EU relief grants

Very early Tuesday morning the heads of state in the European Union reached a historic agreement on a coronavirus recovery package (DK). The deal consists of EUR 750 billion ($860 billion) in loans and grants to offset the economic damage caused by the pandemic. It was settled after four days of sometimes intense negotiations. The difficulty was owing mainly to the objection of the “frugal four” nations – which included Denmark – to providing grants as well as loans to the hardest-hit countries.

Three of the Frugal Four – PMs Stefan Löfven (Sweden), Sebastian Kurz (Austria), and Mette Frederiksen. Photo: John Thys/Pool © Scanpix.

This is the first time that the EU will issue and be liable for bonds jointly. That is, the first time that the Union has taken joint responsibility for helping individual countries without obligation. During the financial crisis, the Union provided loans to Greece under strict conditions and sent inspectors to conduct investigations on their implementation. In this case, there are also conditions on reforms attached to the grants, but they will not be enforced by external monitoring.

The inevitable compromise
The 23 other countries wanted to use EUR 500 billion for grants, and the four holdouts countered with an offer of EUR 350 billion. The latter were criticized, particularly by French President Emmanuel Macron, for putting the entire European project in danger. The leaders finally reached a compromise of EUR 390 billion along with rebates on the annual contributions of the frugal four.

Denmark’s rebate in the new budget will increase from DKK 1 billion ($150 million) to DKK 2.7 billion ($415 billion). Altogether Denmark’s contribution during the coming budget period will increase, partly because the departure of the UK from the Union raises the expenses for the remaining countries. Denmark receives a rebate because it is a net payor to the budget, meaning that it contributes more than it receives in subsidies.

About the rebate, Prime Minister Mette Frederiksen said, “It indicates that you can fight for both Danish and European interests at the same time. . . . Altogether it is a really, really good agreement for Europe and a really, really good agreement for Denmark.”

Climate and democracy in play
Frederiksen said that it was also in Denmark’s interest (DK) that the southern European countries can recover from the coronavirus crisis. She also commended the increased emphasis on climate and research in the new budget. Another main sticking point was a requirement that the EU's annual disbursements be contingent on countries’ adherence to democratic principles and the rule of law. This was directed particularly at Poland and Hungary, which threatened to veto the relief package and succeeded in forcing a compromise on the measure that weakened the review process.

The fatigued officials were relieved to be able to bump elbows after the last marathon session. "I can’t remember the last time I have been awake for two nights in a row, but it was necessary,” said Frederiksen. “[We] toast not with champagne, but with juice.”