Last week Germany and France reached an agreement on a relief package for European Union regions and industries (DK) that have suffered most during the coronavirus pandemic. The funding would take the form of a loan for EUR 5 billion that all 27 EU member states would be liable for. It is the first time that Germany has gone along with a proposal for some form of mutualized debt. France had wanted an even larger aid package. Italy and Spain are the countries that have been worst hit by the virus.

North vs. South redux

The measure must be approved by all 27 member states, however, and Denmark is one of a group of four northern European countries that opposes the program. The other countries in the so-called “frugal four” are the Netherlands, Finland and Austria. The group is insisting that the aid take the form of loans instead of grants and that member state contributions remain at 1 percent of GDP. Proponents of the plan say that it is necessary in order to hold the EU together. The EU Commission will present a budget that incorporates the recovery package as long-term debt on May 27. 

The EU has a history of reluctantly reaching compromises in order to keep the Union intact. This project would represent a momentous step toward a fiscal union that the wealthier member states have always opposed. In the coming negotiations, for the first time the northern European countries will be on the other side of the debate from Germany, Europe’s largest economy. Danish Prime Minister Mette Frederiksen has expressed her opposition (DK) to the plan since it was first proposed by the EU finance ministers last month.

Breakdown of party alignment

The two largest Danish opposition parties support the Social Democratic administration’s rejection of a grant and joint EU debt. “The idea of shared debt in the EU is just as crazy as if you should share a mortgage loan with your neighbor regardless of how they maintained their property,” said Morten Messerschmidt of the Danish People’s Party. On the other hand, the Social Liberal Party, which supports the Frederiksen administration, favors the proposal partly because it will benefit the Danish private sector, which depends on exports. 

Frederiksen, who has recently been criticized for locking down Denmark without a clear recommendation from the Health Authority and for being too slow to reopen the Danish economy, thus faces a debate over the proposal among her own supporters in Denmark besides negotiations with the most powerful European countries.

Tourism in pandemic times

Several European countries are also working on a plan to allow cross-border travel (DK) to resume and restart the tourism industry. Germany has recently reopened its borders and has invited Denmark to do the same. German Foreign Minister Heiko Maas has proposed travel guidelines and quarantine rules to be implemented when the tourist season begins next month. Maas held a video meeting with nine other countries to discuss the practical details. 

Others are skeptical that the southern European countries will be ready to allow tourists in so soon. Conditions vary greatly from country to country. Spain has only recently begun to relax its lockdown restrictions. On the other hand, Greece has already reopened tourist resorts. Under pressure from opposition parties, Frederiksen has promised to announce a decision this week on reopening the Danish borders. Denmark’s rural economies and summer house owners are anxious not to miss the approaching rental season and the usual influx of German tourists.