Dutch PM Rutte wants EU to play frugal in the

Dutch PM Rutte wants EU to play frugal in the face of mega US subsidies Europe

Don’t inject fresh money into the European Union – only reform national policies, says Dutch Prime Minister Mark Rutte.

It’s the best way to prevent EU industry from being wiped out by US companies under Washington’s big new green subsidy program, Rutte told a group of journalists at the office of the Dutch embassy to the EU in Brussels on Tuesday.

“There is so much money in the system at the moment,” Rutte said shortly after a meeting with EU Commission President Ursula von der Leyen and Belgian Prime Minister Alexander De Croo. He also called for deeper reforms, stressing that some European countries are spending so much on their pension systems – “all the money you can’t spend on innovation and green technology”.

Rutte is often seen as the key leader of the so-called “frugal” group of European countries, made up of like-minded, fiscally conservative nations. The group, which also includes Denmark and Sweden, was reluctant to increase national contributions to the EU coffers – at least until the coronavirus pandemic forced them to partially adjust that line.

Discussion among EU policymakers on how to preserve the bloc’s industrial base comes ahead of a meeting of EU leaders next month as the US introduces a $369 billion industrial subsidy program to boost green industries under the so-called inflation support reduction law.

The US legislation has fueled fears about the impact on European industry and prompted calls for a review of state aid rules. Another concern is that such subsidies jeopardize the EU’s internal market by conferring an outsized advantage on countries with greater fiscal power, such as Germany, that have more fiscal leeway.

Rutte, who was recently in Washington to visit US President Joe Biden, said: “This Inflation Reduction Act (IRA) has a number of consequences – but unintended ones.” The IRA “is forcing us to think about how we organize ‘ to stay competitive, he added.

On the one hand, he sees the efforts of the USA to achieve the climate goals as a positive development. On the other hand, he pointed out the risks for a level playing field such as with electromobility. “Companies could shift investment from the EU to the US,” he said, echoing a much-repeated fear.

But EU subsidies should remain unchanged, Rutte argued. Regarding calls for an adjustment to the IRA by changing the EU state aid rules, he admitted: “I can accept some changes as long as they are limited.”

Rutte was clear that no new EU money should be put on the table. “I mean, no grants, but no loans either,” he said. “There is still so much left” – for example loans in the Recovery and Resilience Facility, the heart of the EU recovery plan for the pandemic.

A draft text, which leaders plan to agree on at their forthcoming European Council, hints at new sources of EU funding. The draft, seen by POLITICO, calls for “moving the work forward, particularly building on the success of the SURE programme,” referring to the EU’s loan-based employment support program created by Rome and others would.

Rutte stressed that he does not want to see this proposal in the text, which will be discussed by EU ambassadors on Wednesday.

When asked if he was in favor of a new SURE program, “I would say we have serious doubts,” he said.

Barbara Moens contributed to the reporting.