IKV Chairman Ayhan Zeytinoğlu assessed the agreement reached in the European Council on the 2021-2027 EU budget and the COVID-19 recovery fund. IKV Chairman Zeytinoğlu stated that a historic compromise was reached at the Council meeting, which had been going on for four days, and added that this compromise was of great importance for the future of the EU. IKV Chairman Zeytinoğlu stated the following:

“The EU Summit, which has been going on for four days, has resulted in a positive outcome, and Member States have reached a deal on the budget and recovery package. Accordingly, there is a package of 1.82 trillion euros in total. This includes the EU's 7-year budget with a size of 1.074 trillion euros and a recovery fund called “Next Generation EU” with a size of 750 billion euros. Through these financial instruments, the EU aims to overcome the negative effects of COVID-19, strengthen its capacity in the field of health and research, and channel resources to its new priorities. In other words, while adopting a recovery package to get out of the crisis, the EU also plans to modernise its economy beyond recovery.”

“Change in Germany’s Stance is at the Heart of the Recovery Plan”

IKV Chairman Zeytinoğlu also commented on the details of the agreement and its consequences for the EU. Chairman Zeytinoğlu stated that it was important that the recovery fund proposed in May was agreed by the EU leaders within two months and continued his words as follows:

“The first proposal for a recovery fund was put forward by French President Macron and German Chancellor Merkel in May. The European Commission has put flesh on this proposal. 500 billion euros out of the 750 billion-euro package were to be given out as grants and 250 billion were to be given as loans. Under the proposal, for the first time, the European Commission would borrow from the international markets on behalf of the EU and make it available to the Member States. Germany’s support for common borrowing marked a fundamental departure from its approach during the global financial crisis.

We see an increasing awareness that EU countries are economically interdependent and their fates are united. On the fifth day of the marathon meeting, a deal was reached, but naturally some concessions were made. The Netherlands, Sweden, Austria and Denmark, known as the Frugal Four, wanted the share of grants in the package to be reduced and the use of grants and loans to be made conditional. As a result, EU leaders agreed on 390 billion euros in grants and 360 billion euros in loans instead of the original proposal foreseeing 500 billion euros in grants and 250 billion euros in loans. Some cuts were made in the budget, particularly in the areas of research, health, external action, investment and the green economy. Benefiting from the recovery fund will depend on the decision of the Member States. However, Member States, which want to benefit from the recovery fund, will need to align with the reform priorities of the EU particularly in the areas of digital transformation and the Green Deal.

Linking the payment of EU funds to respect for the rule of law was yet another controversial issue on which an agreement was not possible. The importance of upholding the rule of law was mentioned. The deal will need to be discussed and approved in the European Parliament.”

“Turkey cannot Remain Indifferent to the Change and Transformation within the EU”

Chairman Zeytinoğlu highlighted the importance of the agreement for Turkey as follows:

“Although there are pros and cons, the agreement reached is important. Turkey as a candidate state needs to monitor closely the reform process in the EU which is also our largest trading partner and take the necessary steps in the area of legislative alignment and implementation.

EU’s priorities such as the Green Deal, Digital Single Market and economic resilience also should also be taken into consideration by Turkey. First of all, we should consider the new trends in trade and industrial policies of the EU as our top export market. Furthermore, the EU is a major player in the global trading system marked with increased protectionism and competition and maintaining cooperation with the EU could yield important benefits for Turkey. As IKV, we will continue to monitor and analyse these processes closely and continue to guide the business community.”