“A strong appeal for ambitious cooperation” - Report by President Charles Michel at the European Parliament on the video conference of the members of the European Council of 19 June 2020

Source: European Council i, published on Wednesday, July 8 2020, 8:00.

Thank you for this opportunity to speak with you. Covid-19 has shown that we can't always control what happens to us. But we can control how we respond. Let’s not forget that the pandemic is still with us. As we speak, it continues to destroy lives, businesses, and jobs.

One statistic alone paints the dramatic picture: Compared to pre-Covid growth forecasts, the EU is estimated to lose 1,5 trillion euros in economic output in 2020-2021 alone. This is indeed a grim prospect.

As you know, on 23 April, the European Council asked the Commission to urgently come up with an ambitious recovery plan that was commensurate with the challenge we are facing. In June, Leaders had a first discussion on the Commission proposals. I will say more about this in a minute - but our initial discussion highlighted that some elements of the Commission proposal were simply not acceptable for a number of Member States.

That is why after our meeting I launched the process of bilateral talks with all the Leaders. I then called a physical summit, the first since the crisis, on 17th and 18th July.

There are three issues in particular I would like to discuss with you: one is my traditional debrief to you on the leaders' videoconference in June, the second is to clarify the outcome of my bilateral meetings with leaders and share with you my intentions for the upcoming European Council and lastly, I wish to make a strong appeal for ambitious cooperation between the Member States and with you, the European Parliament. We need to work together if we want to make this work.

Our last video conference of the European Council, on June 19, was the first time EU leaders discussed together the Commission’s proposals for the MFF and the Recovery Fund. This summit was a necessary step to prepare for the decisions we need to take. It served as a bridge, connecting the consultation phase to our current negotiation phase.

We noted the areas where consensus is emerging:

  • Member States agreed on the need to address together the MFF and the recovery fund,
  • They agreed that an unprecedented crisis required an unprecedented response.
  • And they also agreed that we would focus on the regions and sectors most affected.

But we also observed areas where our views still needed to converge, for instance, the idea of loans for grants is still difficult, even very difficult, to accept for some Member States. Similarly, some leaders showed reluctance to accept the allocation criteria suggested by the Commission because they consider that there is no link in the current proposal with the consequences of the COVID-19 crisis.

Last week, I concluded my first round of bilateral discussions. They have been intense and sometimes difficult, even very difficult, but always in a constructive spirit.

Firstly, with regard to the size of the next European multiannual budget, there are different opinions as to what is acceptable.

Secondly, and related to the first point, is the question of corrections, the rebates: for certain Member States this issue is essential, whereas for others it should no longer be on the table. This will certainly be one of the points that will need to be addressed in the context of a possible overall agreement.

The third point is the size of the Recovery Fund. You are familiar with the proposal put forward by the Commission. Not all Member States share the view that the proposed amount should be accepted. The fourth point, which I have already mentioned, is the question of loans and grants. The very principle of grants poses problems for a number of Member States. And the question of the balance between loans and grants is another sensitive issue on which decisions need to be taken.

I would like to focus briefly on the fifth point, which is the question of the allocation criteria in the context of the Recovery Fund. In June, many Member States expressed reservations because they considered that the Commission proposal was based on pre-crisis data. These data, which relate to unemployment, GDP per capita and population, are not sufficiently dynamic and do not adequately take into account the real situation in terms of the economic and social impact on the most affected regions, countries and sectors. That is why we are examining the possibility of taking a slightly more dynamic approach to the allocation criteria.

Lastly, the sixth point, which is absolutely essential, is the question of the link between the Recovery Fund and the reforms that must be put in place in the different Member States, and also how to organise governance and the roles of the different institutions. This is a discussion that concerns the role of the European Parliament very directly.

Moreover, in terms of the conditions and the link with the Recovery Fund and the MFF, the rule of law is another question that will need to be discussed. The question of the link to climate ambitions is also extremely important.

You will recall that several months ago, before the beginning of the crisis, we proposed that a significant part of the MFF should be directly linked to our climate ambitions. I would also remind you that in December we set a very ambitious objective for the European continent, for the European Union - that of achieving carbon neutrality by 2050.

There are also other issues at stake which I know are crucial to you, the European Parliament: first the own resources and I am aware that these are key for your agreement. We worked a lot on plastic waste and on ETS. There is some reluctance on that, but we have also looked at other possible resources, that have gathered some support like the digital taxation, like the financial taxation. Flexibility in the MFF for cohesion and agriculture is also an important topic for some Member States.

And there are two other issues that we need to tackle in order to try to reach an agreement. The first one is the question of the front loading in the Recovery Fund and the questions of the commitments and payments and the time that we need for both. And the question of repayments, when do we start the repayments, you know that the Commission proposes to start the repayment not during the upcoming MFF but in the next one, maybe it will be useful to propose to start the repayment earlier.

As you probably know, I have announced that I intend to publish a negotiation box by the end of this week. Together with the German Presidency, we will discuss this further in the COREPER, the meeting with all the Ambassadors, and this process will allow us to prepare thoroughly for our July European Council Summit. I can assure you I am doing all I can to secure an agreement. We need to find a workable solution quickly.

My impression after the extremely intense round of consultations in recent days, and in the two or three weeks since the last Council meeting, is that we are still some way from the end of the negotiations. There remains a considerable amount of work to do, but I am convinced that we can make progress provided that the Member States are determined to cooperate more with each other.

I also believe that, faced with an unprecedented crisis, it is vital that cooperation between the European democratic institutions should also be unprecedented and in line with the scale of the challenge. I can assure you that I understand this call from the European Parliament to be fully mobilised and to fully exercise its responsibilities within the context of the decisions to be taken. You can count on me, in full partnership with the rotating Presidency, to ensure that we progress together in the best possible way.

Lastly, I would like to share with you my conviction that we will not achieve our objectives unless everyone agrees to make concessions. If we all, whether Member States or institutions, adopt rigid, fixed and immovable stances from the outset, then there will be no solution. And we will have failed to live up to the challenge of our shared European project. The only option is to meet each other halfway, not only to advance our common European interest with ambition, but also with the realistic conviction that we have to take each other’s viewpoints into account to be able to take decisions together.

This is the call that I address to each of you today. The amounts involved are unprecedented in the history of the European Union, with huge figures under discussion for the European budget for the next seven years and for the Recovery Fund.

It is my conviction that we need to keep in mind at all times, and be guided by, three objectives, which we should strive to achieve in parallel.

The first of these is to continue with the process of convergence, an objective which has underpinned the European project from the very beginning. We need to continue to work tirelessly for European convergence, which is, and will always be, the strength of this European project. As recent history has shown, we also need to work to increase our resilience, the capacity to be stronger tomorrow and to learn the lessons of this crisis, so that we are in a position to react better and more effectively in the future. Lastly, I believe that we also need to keep a third objective constantly in our political sights: transformation. The transformation of the European project on the basis of the digital agenda, on the basis of the need to take the climate into account as an opportunity to make the European Union stronger, more solid and fully turned towards a future that we must build together confidently and with optimism. I fully realise that the challenge is difficult, but it is also of immense importance.

Rest assured, dear colleagues, Mr President, that I am very determined not only to move the discussion forward within the European Council, but also, once it has been able to move forward and take a decision, I intend very quickly to engage fully in positive and constructive dialogue with the institutions, and in particular with the European Parliament. Thank you for your attention.