EU Leaders Strike Deal on Recovery Funds: Concessions Granted, Grants Cut

After negotiating for 4 days, starting on Friday, the EU leaders finally stroke a deal on the European recovery funds. Even the deal is announced as a success by all the leaders, it seems that it disadvantages the developing countries, such as Romania, as the recovery funds have a smaller component in grants than initially desired.

In May, as announced by Ursula von der Leyen, the recovery plan of EUR 750 billion had a bigger component in grants: EUR 500 billion. Still, the pro-austerity countries, namely The Netherlands, Austria, Sweden and Denmark, opposed this scenario. In their leaders’ opinion, the recovery plan should’ve had less grants and more loans.

This condition led, during the negotiations, to a diminishing of the grants included in the EUR 750 billion plan: now, the accord contains only EUR 390 billion in grants, which is a victory for the pro-austerity countries. The funds allotted as grants decreased with 22% since the initial announcement.

According to the initial recovery plan announced in May by Ursula von der Leyen, the president of the European Commission, Romania was to receive around EUR 31 billion, from which almost EUR 20 billion in grants and EUR 11,5 billion in low interest loans. Now, the grants will decrease considerably.

The Romanian president Klaus Iohannis avoided to present the concession as a failure for Romania. He announced the accord in an ambiguous way, saying Romania would get EUR 79,9 billion for the 2021-2027 period multi-annual financial framework. The fact is that, during these 4 days spent by the European leaders in Brussels, it was also negotiated the multi-annual financial framework for the next period. This sum is supposed to also include the grants allotted to the country from the EUR 390 million allotted to all the European countries.

According to the deal negotiated in Brussels, Romania could receive only EUR 16 billion in grants as compared to the initial sum of EUR 2 billion. But this is not the biggest problem for Romania, but the way the money will be spent.