Oh dear, Brussels! Von der Leyen’s coronavirus bailout plot could be DERAILED by EU treaty

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Article 125 of the Treaty on the Functioning of the European Union says that neither the EU nor individual member states can be liable for the debts of other governments. So-called debt mutualisation is therefore not allowed. Yet southern EU states such as Italy and Spain have repeatedly called for the adoption of joint debt instruments to finance the recovery. Speaking to Express.co.uk, Brexiteer Alice Grant claimed European Commission President Ursula von der Leyen’s plan to save the eurozone from a coronavirus-inflicted financial crisis has the real aim of a closer than ever fiscal union. 

She said: “The EU are headed towards a fiscal union with this idea of a bailout of over €500 billion which is actually banned in their own treaty.

“The Treaty on the Functioning of the European Union says the European Union shouldn’t be borrowing this vast sum of money.

“Yet they are going ahead and doing this because the only thing they care about is saving their project which is headed for economic disaster.

“They shall continue pushing for this closer and closer union on the nation state despite everything.

“And I think this is why for the second time in a decade we are going to see a crisis in the eurozone.”

The European Commission has put forward a blueprint, largely based on a Franco-German proposal, for the so-called pandemic recovery fund.

But now friction has emerged between European capitals as President Emmanuel Macron and Chancellor Angela Merkel prompt a hasty response from the rest of the bloc.

On Tuesday, President Macron travelled to the Netherlands in a bid to convince Mark Rutte to come on board with his plan.

The Dutch prime minister is an outspoken critic of the proposal, insisting on a drastic rethink before it can be rolled out.

The proposed package consists of €500 billion in grants and €250 billion in loans.

The debts would be repaid by EU member states using increases to national contributions to the bloc’s long-term budget.

Brussels has also pitched a series of new EU taxes that could help claw back the funds.

Mr Rutte has said the money should be distributed in the form of loans and should come with strict political conditions, such as the need to accept austerity measures as the price to pay for a bailout.

With EU leaders set to meet in Brussels, for the first time since the coronavirus outbreak, on July 17, member states have lashed out at Paris’ “take-it-or-leave-it” approach.

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A Nordic diplomat told the Politico website: “The more the big two come with a take-it-or-leave-it package, the harder it makes life for the other countries.

“No country will agree to be a cheerleader for the big two countries.”

The so-called “Frugal Four” – Denmark, Austria, Sweden and the Netherlands – have been the most vocal opponents to the plan.

An EU official said: “The Frugal Four are not very homogeneous.”

They also accused the fiscally conservative northern states of poisoning the atmosphere with attacks on their southern partners.

“Austria will be extremely flexible in the end, but Chancellor Sebastian Kurz’s rude rhetoric has toxified the whole climate,” the official said.

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