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--Senior Frugal Four Source Calls Compromise Proposal No Basis For Deal
--Source: Draft EU Summit Conclusions 'Absurd'
--Sources: Dates For Further EU Summit By End Of July Quietly Being Pencilled In
By David Thomas
     BRUSSELS(MNI) - Proposed amendments to the European Commission's EUR750
billion 'Next Generation' proposal for the EU's recovery from Covid-19 are
window-dressing which fail to address concerns over the size and composition of
the fund, a senior source from one of the so-called "Frugal Four" countries told
MNI, as some officials in Brussels began to talk informally about the need for
another summit following the July 17-18 meeting to clinch a deal.
     A compromise plan put forward by the presidency of the EU Council on Friday
is insufficient, and the Netherlands, Austria, Denmark and Sweden will continue
their fight to reduce the size of the fund, the source said.
     "I have seen (EU summit) draft conclusions and they are absurd. They are 64
pages long and describe in detail the (earlier) proposal of the Commission. No
way can this be the basis of a deal. It's more like a provocation," the source
said.
     --LETTER
     In a letter to the Dutch Parliament on Monday, the country's finance and
foreign ministers insist that they will demand a cut in the size of the proposed
package. The ministers take particular issue with the EUR190 billion 'top up'
which would come in addition to a EUR560 billion Recovery and Resilience Fund.
The Commission and Council propose that top up money be disbursed via
traditional programmes in the EU's 2021-2027 budget, such as cohesion funding
and farm spending.
     In line with the Frugals' earlier call for a more temporary fund based on
loans to member states, the letter pushes for an approach more clearly targeted
at combating the impact from Covid.
     "The government also considers it undesirable to finance current
expenditure from the EU budget with loans and is critical of this construction,"
the letter states.
     The document welcomes some aspects of the compromise proposed by EU Council
President Charles Michel, such as the pledge to end payments to member states
within the lifetime of the next seven-year EU budget, efforts to address
allocation concerns by updating the criteria for aid, and to involve governments
more in decisions on how the aid is disbursed.
     But the Dutch also demand stricter conditions on how money is disbursed and
a 'decisive' role for member states in vetting whether required structural
reforms have been accomplished and also that aid is spent on reforms which
increase sustainable growth potential.
     The EU Council Presidency says it is committed to pushing for an agreement
this weekend. But there is informal talk among officials that another summit
will be needed and dates for further leaders' meeting before the end of July are
provisionally being pencilled in.
--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com
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