Merkel Says Overcoming Pandemic Is Key for German EU Presidency

(Bloomberg) -- German Chancellor Angela Merkel said overcoming the coronavirus pandemic is the main priority for her country’s European Union presidency, as the European Commission president urged member states to give the green light to the region’s massive stimulus package by the end of July.

Speaking in her weekly podcast on Saturday, Merkel said she will do her utmost to help reach an agreement on the 750 billion-euro ($840 billion) plan to help EU economies recover from lockdowns aimed at curbing the spread of the virus. She added her country will play an “honest broker” in negotiations.

“We want to ensure European economies start growing again, we want to use our potential for innovation and we must secure our social cohesion,” Merkel said. “That’s why it’s important that we agree as quickly as possible on the new EU budget and recovery measures.”

The German chancellor has already warned her fellow leaders that they will be jeopardizing the bloc’s economic recovery and risking a market rout if they fail to complete negotiations over the package next month.

First Test

Ensuring the agreement is reached will be the first major test of Germany’s six-month presidency of the EU, which begins in July. The recovery program, which needs to win the backing of each of the bloc’s 27 nations, would be funded by joint debt issuance in a significant step toward closer economic integration.

European Commission President Ursula von der Leyen sought to reinforce the sense of urgency in her interview with Handelsblatt on Saturday, but signaled that reaching the deal at the next EU summit on July 17 could be a challenge.

“We have to see whether such an agreement will be successful on the first try,” von der Leyen told the German newspaper. “Either we make it the first one or we need a second one. In any case, we have to work until the package is on the way.”

Four fiscally hawkish nations, including the Netherlands and Austria, have been chafing at the idea that their taxpayers could wind up on the hook for spending in countries that were struggling financially long before the virus hit. To them, the aid needs to come faster, be more targeted, focus on loans and to be distributed under tighter criteria.

Von der Leyen said on Saturday that the EU can’t add more loans to its most-indebted members and “cut off the air with ever higher interest burdens.”

Yet in a bid to placate the holdouts, she assured that the support should include reform requirements. Dutch Prime Minister Mark Rutte was “right with his demand that the investments must go hand in hand with reforms,” she said.

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