Watch out, Brussels! Austria plots behind EU’s back to build new rebel alliance

EU slammed by Kurz for 'bizarre' vaccine distribution

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Austria is seeking to build a team of EU rebel countries that would prevent a softening of the bloc’s budget rules when they come under review later this year and in 2022, calling for a stronger focus on reducing public debt.

In a letter to EU counterparts, Austrian Finance Minister Gernot Bluemel said the rules had been central to reducing debt-to-GDP ratios across the bloc after the sovereign debt crisis.

Austria is among a group of EU countries often seen as frugal, along with Sweden, Denmark and Finland, the Netherlands, Germany, the Baltics, Slovakia and the Czech Republic.

Mr Bluemel wrote in the letter: “A key lesson after the financial crisis was the need to reduce high debt ratios and increase fiscal sustainability in order to prepare for unforeseen future events.

“The Commission will come up with a review of the economic governance framework in the coming months.”

He added some ideas for reforms of the EU’s Stability and Growth Pact were presented at a ministerial meeting last month.

He continued: “I am somewhat concerned about some contributions questioning a rules-based framework or diluting the value of sustainability.

“Our common objective must be a reduction of debt to GDP ratios over the medium- and long term.”

Some senior EU officials said the rules, which have already been revised three times and have become very complex over the years, should be simplified and focused on criteria that finance ministers can directly control, like public spending and debt.

But others say the rules should promote investment, which is key for growth, and therefore possibly exclude it from calculations of budget deficits, which now cannot be higher than 3 percent of GDP.

Some senior officials also say, rather than targeting their debt-to-GDP ratios, governments should focus on debt servicing costs.

They argue because interest rates are likely to stay very low for a long time, what a country spends on debt servicing is a better measure of debt sustainability.

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But Mr Bluemel cautioned against that view.

He wrote: “Even though the current financing environment is undoubtedly favourable and the interest rate-growth differential was negative over the past years before the crisis, there is no guarantee that this will always be the case.

“We all have witnessed the economic, social and political costs of swings in market sentiment, when policies and developments were deemed no longer sustainable.”

The Austrian government has been locking horns with Brussels on a number of issues this year.

Last month, the country refused the EU’s proposal to introduce a common minimum wage policy.

Austrian Labour Minister Martin Kocher said the EU lacks competence in the area of labour policy and therefore his government could not accept giving away its sovereign powers to decide on such an issue.

Back in March, Austria was at the forefront of a group of EU leaders lambasting the Commission’s efforts in the procurement of vaccines.

Chancellor Kurz even threatened to veto an order of 100,000 vaccines by the Commission unless Ursula von der Leyen gave into his demand to change the way jabs were allocated to member states.

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