Cyprus is pleased with a “historic” deal among EU leaders clinching an unprecedented €1.8 tln budget plus COVID-19 Recovery Fund to fix coronavirus-throttled economies.
After a fractious summit lasting almost five days, the European Council reached a dawn deal on Tuesday that will see Cyprus benefitting €2.7 bln in pandemic emergency funds.
In a written statement issued after the EU27 Summit in Brussels, Cyprus President Nicos Anastasiades said: “I express my full satisfaction because, after many days and intensive negotiations, Cyprus has achieved the economic goals it had set in relation to the MFF and the European Union Recovery Plan”.
Following the agreement, Cyprus will be able to raise a total amount of over €2.7 bln, including €1.25 bln from the €750 bln recovery fund.
“In view of Turkey`s reckless behaviour and following my intervention, a provision was included according to which the financing of third countries, including Turkey, by the European Union, is subject to their respect for the principles of International Law,” said Anastasiades.
The deal, regarded as a compromise between the member states, was linked to the main EU budget, which leaders agreed during the summit will be €1.074 tln over seven years starting in 2021.
Talks lasted 90 hours, making it the longest EU summit since the one held in Nice in 2000 which lasted some 20 minutes more.
The agreement paves the way for the European Commission, the EU’s executive, to raise billions of euros on capital markets on behalf of all 27 states, an unprecedented act of solidarity in almost seven decades of European integration.
Leaders hope the €750 bln recovery fund and related €1.1 tln 2021-2017 budget will help repair the continent’s deepest recession since WWII after the coronavirus outbreak shut down economies.
Although the agreement is strong in symbolism, the summit itself exposed fault lines across the bloc that are likely to hinder future decision-making on money as richer northern countries were perceived to have resisted helping out the poorer south.
Under the agreement, the Commission will borrow €750 bln using its triple-A debt rating, instead of a trillion initially put forward from a number of EU members in the south of the continent.
The union will be disbursing €390 bln in grants – less than the originally targeted €500 bln – and €360 bln in cheap loans.
The recovery plan now faces a potentially difficult passage through the European Parliament as it must be ratified by all EU states, with economists saying that the first tranche will reach the bloc’s economies sometime in the middle of 2021.
Earlier this month, the European Commission forecast that the EU economy would contract 8.3% this year, due to the coronavirus outbreak and shutdown, and then expand 5.8% in 2021.
Cyprus’ COVID-hit eurozone economy is expected to follow a similar pattern of decline and growth.