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The leadership of these Eastern European countries actively opposed the provisions of the other 25 EU members at a meeting of government representatives in Brussels on Wednesday. They continued to veto the recovery plan for the economy affected by coronavirus, while the clock ticks, and if an agreement is not reached before the end of the year, the entire bloc faces an emergency budget.
At a time when Warsaw claims it is running out of help and Hungary says it is ready to allow EU countries to sidestep the need for unanimous approval through intergovernmental agreements, bloc officials are focusing on the so-called ” Plan B”.
Under this plan, Hungary and Poland would be eliminated from the 750 billion. ($ 908 billion) of recovery fund, depriving them of the opportunity to veto 2.2 trillion euros. A plan for the use of funds worth US dollars, including the budget for 2021-2027, and the search for a way to immediately channel funds to the most affected countries.
“If they don’t respect our rules of the game at the European level, we will play without them,” Manfred Weber, chairman of the European People’s Party (EPP) group in the European Parliament, told Bloomberg TV on Thursday. “So they have to understand that this can be a big problem for their own countries.”
EU leaders are scheduled to meet on December 10, during which time they are likely to try to find a way out of the deadlock.
Hungary and Poland, which are under investigation for alleged violations of European legal norms and democratic values, risk inconvenience if no agreement is reached, with a total loss of 180 billion euros. ($ 218 billion) from the multi-year budget and the bloc’s recovery fund. And yet they continue to insist on their positions.
Polish Prime Minister Mateusz Morawiecki has said that his country will be able to withstand a possible withdrawal from the recovery fund, as it can distribute debt securities cheaply in financial markets.
“The recovery fund is actually made up of credits,” Morawieckis said while answering questions online Wednesday night. “Yes, these are low-interest loans, but today we can also issue a loan in a very low-interest market, by distributing bonds.”
Hungary is ready for more negotiations, while reserving the right to veto financial deals on terms it continues to call unacceptable, Cabinet member Gergely Gulyas said.
The government of Hungarian Prime Minister Viktor Orban remains ready to support the implementation of the EU Recovery Fund in the form of an intergovernmental agreement, out of “solidarity” with the southern states, though again only if no unacceptable conditions are imposed, Guly said.
Option B of the plan is an “alternative measure” in the event that Hungary does not soften its position with Poland, Weber said.
According to Rabobank, a flash of tension could weaken the zloty and the forint.
According to this position, Poland and Hungary are “walking a very fine line” because they need stimulus measures just like the rest of the economies in the region, “said Spanish Foreign Minister Arancha Gonalez Laya in an interview with Bloomberg TV. At the moment, it is a question of responsibility, and that is why we expect responsible behavior from both Poland and Hungary, “said the minister.
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