Brussels (AFP)

Faced with the threat of a historic recession in the EU, Brussels is proposing an unprecedented recovery plan which will be debated for the first time on Friday by the 27 European leaders.

Joint loan, new taxes, donations or loans, conditions. Detailed review of the annoying subjects:

- Hundreds of billions of euros -

Just under three weeks ago, the European Commission proposed a 750 billion euro plan. This is more than what France and Germany had imagined, which offered 500 billion euros.

Several northern countries question the amount proposed by Brussels deemed too high: the "four frugal" - the Netherlands, Denmark, Sweden and Austria - but also Germany. German Finance Minister Olaf Scholz has made it clear that 500 billion is enough.

- A large common European loan -

This is the great novelty of the plan: the European Commission proposes to borrow on the markets 750 billion euros. Never has it raised such a sum on behalf of the 27.

Thanks to its good image with investors, given confidence by the budgetary orthodoxy of countries like Germany or the Netherlands, Brussels benefits from low interest rates. A boon for southern countries like Italy whose public debt is exploding.

This mini-revolution was made possible thanks to the flip-flop of Berlin which, faced with the scale of the crisis, accepted alongside Paris the idea of ​​pooling debts between member states.

In the Brussels proposal, the payment of interest would begin in 2021, but the repayment of the borrowed sums would only take place from 2028 and would extend until 2058.

Berlin calls for it to start as early as 2027.

- New European taxes -

To repay this large loan, two solutions: either ask the 27 of the Union to increase their contribution to the European budget, or find new resources.

Brussels argues for the second option by creating new taxes. A strong argument for all the countries which pay more than they receive from European funds, and in particular for the "four frugal" who refuse to increase their cost.

Among the taxes proposed by the Commission: a "carbon adjustment mechanism at the borders" to charge imported goods whose manufacturing process is very polluting, a tax on the activities of large companies, even a tax on large companies digital sector.

However, a notable difficulty, the creation of European taxes requires the unanimity of the member states.

- Donations and loans -

Of the 750 billion euros in the recovery plan, the Commission proposes to pay 500 billion in the form of grants - which must not be repaid by the beneficiaries - and 250 billion in the form of loans.

But the "frugal" reject the idea of ​​donations and want only credits. These four countries, which - like Germany, France and Italy - pay more than they receive from the European budget are worried.

Because in case of disagreement on the creation of new resources, it will be up to the richest countries to put their hands in their pockets.

- The South, main beneficiary -

In the plan presented by Brussels, Italy and Spain could carve out the lion's share with more than 172 and 140 billion euros respectively (divided between grants and loans).

Very bereaved by the coronavirus pandemic, these countries have economies largely dependent on tourism, undermined by containment measures.

The four central European countries, known as the Visegrad group (Poland, Czech Republic, Hungary and Slovakia) have recently called for an "equitable" distribution of the plan.

If Poland is, according to the Commission's project, the third beneficiary with 63.838 billion euros, these neighbors are much less fortunate and fear being sacrificed for the benefit of the South.

- Aid with conditions -

Brussels is proposing that the countries receiving aid present an investment and reform plan compatible with EU priorities, that is to say the ecological and digital transition as well as a more resilient economy.

The countries of the North, like the Netherlands, insist on the importance of reforms which would make it possible to consolidate public finances.

For their part, the Southern countries, like Italy, reject any idea of ​​too strict control of their policy which would amount to a trusteeship, as experienced by Greece at the time of the eurozone crisis .

© 2020 AFP