German, Dutch leaders grapple over European reform amid virus crisis

Berlin (dpa) – German Chancellor Angela Merkel called on Europeans to make courageous reforms at the start of her meeting with Dutch Prime Minister Mark Rutte on Thursday, as they set out to discuss a controversial European Union post-pandemic recovery package.

Aid that is not linked to reforms and a focus on the future ultimately won’t help, Merkel said.

After the crisis, it will be obvious who can really guarantee people’s prosperity – something that is only possible with a competitive, sustainable economy, she said.

Rutte acknowledged that the pandemic had caused great damage.

“It is now very important that we tackle this blow that Europe has suffered together,” he added.

Germany and the Netherlands can only move forward if the whole European Union is doing well, he said, noting that all economic systems are very closely linked.

The meeting comes ahead of a special EU summit on July 17-18, at which many hope for signs of agreement on a proposed European Commission recovery package worth 750 billion euros (851 billion dollars). This consists of 500 billion euros in grants and 250 billion euros in loans to help with EU countries’ economic recovery.

One of the so-called “Frugal Four” nations, the Netherlands – along with Denmark, Sweden and Austria – would prefer loans rather than grants, and for the money to be linked to binding economic reforms.

On Thursday, Rutte underlined the importance of a European recovery fund but said that this should be carried out together with reforms “so that all EU member states are also strong, and so that such a fund is not necessarily needed if a subsequent crisis hits.”

Looking further ahead to the EU’s medium-term financial framework, Rutte said the EU should be thrifty. “We don’t want the net contribution to rise now as a result of Brexit and the coronavirus.”

Rutte said he wanted a green and digital Europe, but also an EU that firmly backed its constitutional values, with rules that were respected everywhere.

The leaders’ talks are also due to focus on Germany’s priorities during its rotating presidency of the EU Council. “We have a lot of confidence in you,” Rutte told Merkel, wishing Germany every success.

Merkel’s appeal for reform and compromise follows a similar call she made on Wednesday during her first visit abroad since the outbreak of the pandemic. She appealed to the European Parliament in Brussels to seek a compromise.

“Our common goal is to come to a consensus as soon as possible … I really hope that we can come to an agreement during this summer. This still requires a lot of willingness to compromise from all sides,” she said.

Rutte, meanwhile, faces domestic pressure from fiscal hawks at home and has held a more critical stance towards the proposal.

“Help from the North means reforms from the South. There’s no other way,” the centre-right liberal politician said last week.

After Merkel, Rutte plans to meet the heads of government of Italy, Spain and Portugal to discuss the recovery deal.

Italian Prime Minister Giuseppe Conte is expected to arrive in the Netherlands for talks on Friday, a government spokesman said in The Hague on Thursday.

The visit is expected to be followed by lunchtime talks with Spanish Prime Minister Pedro Sanchez in the Hague on Monday, with Portuguese Prime Minister Antonio Costa set to meet with Rutte a few hours later.

French President Emmanuel Macron already visited Rutte at the end of June on a similar persuasive mission.