The Dutch prime minister said he will oppose any new EU money raised to fund Europe’s response to Joe Biden’s Inflation Reduction Act (IRA), arguing that the union already has enough money to support its green transition.
Mark Rutte said he saw no need for the bloc to take on new debt to provide grants or loans to countries looking to invest public money in green technologies, and urged member states to instead use existing pots of Fully tapping EU funding.
Recent increases in borrowing costs from the European Commission added to the case for capitals to do their own fundraising rather than turning to Brussels, he added.
“I don’t believe we need fresh money here – I don’t mean grants but not even loans,” Rutte said in an interview during a visit to Brussels. “There is so much money in the system right now. . . I really think it’s worth trying to combine what’s already there.”
The US $369 billion Inflation Reduction Act has led EU member states to rush to match the subsidies offered as they try to avoid luring companies to the US. While the US and EU are in talks to mitigate some of the effects of the legislation, European officials expect any adjustments will only address some of the problems they have with the legislation.
Ursula von der Leyen, the chair of the commission, has proposed a range of further measures to mitigate the impact, including a temporary relaxation of state aid rules that limit member states’ ability to subsidize their own green industries.
This has led to concerns that fiscally stressed member states will be unable to provide government support that rivals the strongest economies such as Germany.
The commission is therefore also looking into ways to make it easier for capitals that have been straining public finances to tap into pots of EU money and pump the money into their green industries.
This may include accelerating payments from existing funds or creating new arrangements where the commission borrows money in the markets and lends the money to capital.
EU leaders expect to debate these ideas at a special summit in early February, but Rutte has made it clear that he will not support new lending by the committee.
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He pointed out, for example, that Member States have yet to make full use of the loans available under the Pandemic-era Next Generation EU recovery fund of €800 billion. At least 37 percent of each country’s spending from that fund must be spent on the green transition.
The Netherlands is one of the more fiscally conservative states and tends to be skeptical of calls for new loans at the EU level.
It also positions itself as one of the EU member states to speak out in favor of free markets and Rutte warned that he was “not very happy” with the idea of relaxing state aid rules.
EU leaders will discuss the response to the IRA at a summit on 9-10 February.
“I can accept some changes as long as they are limited,” Rutte said. “But others have to convince me that those changes will be helpful and beneficial.” He added: “Make sure you don’t throw the baby out with the bathwater.”