Czech prime minister happy with EU recovery deal

Andrej Babiš, photo: ČTK/AP/Olivier Matthys

Czech Prime Minister Andrej Babiš has hailed the hard-won EU recovery deal as an important signal for the future of the alliance. The head of government, who pushed to downsize the grants part of the aid package and change the criteria according to which the money will be distributed, said the outcome would benefit the Czech Republic both directly and indirectly –by helping to revitalize the European economy.

At the end of a grueling four-day marathon in Brussels, the Czech prime minister emerged to tell the media he was happy with the outcome of the negotiations.

“I am very glad that the member states were able to agree on a compromise. Given the economic disparities and individual priorities this was not easy and the fact that a deal was reached is an important signal for the future of the EU, an important signal for financial markets. We have shown that we are able to reach agreement and show solidarity; that we have a common interest in securing the prosperity of individual EU members.”

Photo: Gerd Altmann,  Pixabay / CC0

While, like all EU leaders at the summit, the prime minister fought to increase the benefits for the Czech Republic and argued against excessive debt, he had a vested interest in seeing a deal that would revitalize the European economy post-coronavirus. With over 80 percent of Czech exports going to EU member states anything else would have a devastating impact on the export-dependent Czech economy.

Having said that, Mr. Babiš expressed understanding for the “frugal four” –Sweden, Denmark, Austria and the Netherlands – who were concerned about excessive debt and pushed for the countries hardest-hit by the pandemic to be helped mainly by loans rather than non-repayable grants. He too welcomed the compromise that downsized the grants part of the recovery fund from 500 to 390 billion euros. 360 billion will be available in loans. Mr. Babis said that even though this lowered the contribution to all member states, he was happy with the conditions agreed on.

“The Czech Republic has come out of these negotiations extremely well. We managed to negotiate an extra 1.55 billion euros –that’s 42 billion crowns extra from EU cohesion funds, which we consider a big priority because they relate to investments. Moreover the Czech Republic alone got the advantage of being able to transfer 25 percent of the funds between chapters, meaning that we will have greater freedom in deciding how the money will be used. Back in 2018 it was only 5 percent.”

Under the agreement reached the Czech Republic should receive 35.7 billion euros (over 960 billion crowns) from the EU budget in the course of the next seven years. It will be able to borrow another 15.4 billion euros under favourable terms.  Whether or not the country will make use of the latter will depend largely on the conditions under which the European Commission will borrow the funds on international markets.

Mr. Babiš said the next step will be for the Czech government to present the European Commission with a plan for economic reform which is one of the conditions for the Czech Republic to be able to draw the money available.

The EU recovery plan will now have to pass a vote in the European Parliament and be ratified by all member states.