Candidate for Merkel’s successor Merz warns against EU ‘transfer union’ for poorer states

The EU must be careful not to become a “transfer union” in which richer member states are asked to bankroll their poorer peers, a leading candidate to succeed German Chancellor Angela Merkel has said. Friedrich Merz, a lawyer and former leader of the parliamentary faction of Merkel’s Christian Democrats (CDU), said the EU was walking a “very fine line” with the financial rescue packages now under discussion.

Merz was referring to a proposal made by France and Germany for a €500 billion ($548 billion) Recovery Fund that would offer grants to EU regions and sectors hit hardest by the coronavirus pandemic.

He welcomed the initiative but called for checks on the proposal for the European Commission to borrow money on behalf of the whole EU, in order to make sure it is compatible with EU law. “If necessary, the treaty must be amended,” Merz told Reuters.

The politician also said he was concerned about a setback for Europe’s industrial companies during the coronavirus pandemic due to ill-designed rescue policies. “If Europe is not careful, China and the US in particular will emerge stronger from the corona crisis,” he said.