Germany Says Delays in EU Recovery Fund Are Likely ‘Unavoidable’

Germany’s ambassador to the European Union said disputes over the governance of the bloc’s virus recovery fund now make it almost inevitable that it won’t be operational by the Jan. 1 target date.

“Delays with consequences for Europe’s economic recovery will most likely be unavoidable,” Michael Clauss said in a WhatsApp message sent from his spokesman, commenting on negotiations over the bloc’s 1.8 trillion-euro ($2.1 trillion) recovery fund and long-term budget.

EU governments are split over tying disbursements from the jointly financed economic recovery package with the adherence to rule-of-law standards. Allowing the European Commission to raise 750 billion-euros ($878 billion) in debt — a key part of the package — requires the unanimous approval of all member states and a simple majority of EU lawmakers.

Countries such as Hungary and Poland oppose the rule-of-law conditions attached, with Budapest having raised the prospect of refusing to ratify the deal in its national parliament. A group of richer member states, including the Netherlands and Finland, also oppose a compromise proposal put forth by Germany, saying it’s too lenient.

“With the heated debate on the rule of law mechanism within the EU and also in the Council of Member States we are increasingly running into a blockade in the overall budget negotiations,” Clauss said. “The timetable is shifting further and further back.”

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