EU leaders are still far from compromise on relief fund, talks continue

The ‘frugal four’ reaffirmed that recovery with grants is not to their liking

After more than 13 hours of intense negotiations, the leaders of EU27 are far from compromise on the next 2021-2027 budget of €1.074tn and the €750bn rescue fund for mitigating the economic and social impact of the virus. They left the Europa building of the Council shortly before midnight on Friday with still big differences on various elements of the package.

From tweets and short statements it became clear that none of the wrangling parties wants to forsake their line and even the most optimistic observers are already hesitant that a white smoke may appear on Saturday night from the European Quarter in Brussels.

The whole world is watching us, whether Europe is able to stand up united and to overcome the coronavirus crisis strongly, EC President Ursula von der Leyen stressed before the beginning of the summit. All necessary pieces are on the table and a solution is possible, she also said adding that “a solution is what Europeans expect from us”.

The meeting on Saturday begins at 11am, and Council President Charles Michel is expected to present a new negotiating box, which takes into account the views expressed during the plenary session, and at his bilateral meetings held on Friday with some prime ministers.

While German Chancellor Angela Merkel and French President Emmanuel Macron are backing an ambitious package of the 2021-2027 budget and the recovery fund that will provide more grants, it turned to be the main stumbling block for the so-called 'frugal four’ - the Netherlands, Sweden, Denmark and Austria. They are strongly opposing not only the large size of the fund, but also the big share of the grants - €500bn that is planned to be provided and the payouts will be made by all. Dutch Prime Minister Mark Rutte demanded that the help for recovery be approved unanimously by all countries which would allow any of them to put veto on the disbursement. This is a harsh conflict point for some other countries. It is understandable that Spain and Italy, the states hardest hit by the coronacrisis that already have enough debt issues, should resist such an approach. They insisted that the amount of funding they will receive should be according to the pre-defined allocation key, and will not be reduced, as well the money should come mainly in the form of grants.

Austrian Chancellor Sebastian Kurz wrote on Twitter "we must not end up with a long-term debt union". Of course we want to show solidarity, but we also have the interests of Austrian taxpayers in mind, he added.

In the break after the plenary session before the late dinner, Charles Michel met bilaterally with Mark Rutte, and Hungarian Prime Minister Viktor Orbán, who definitely threatened to veto any deal with rule-of-law conditionality attached, other thing the ‘frugals’ stand adamant about. The Polish Prime Minister also strongly opposed such a mechanism.

Whether the aura of the negotiations will change on the second day of the meeting will become clear very soon. Although the camps have not yet signaled that they are ready to make concessions, EU Budget Commissioner Johannes Hahn tweeted after the first day of the meeting leaving room for hope. “A day with difficult negotiations has just ended, but tomorrow is another day and still there is a chance for a compromise. Hope that the European spirit will prevail - in the interest of all,” he wrote.

Similar articles