EU leaders push recovery fund talks into Monday afternoon

Photo: AP Charles Michel (left) poses for photographers with Angela Merkel (third right), Emmanuel Macron (2nd right) and Ursula von der Leyen (right), on the sidelines of an EU summit in Brussels on Sunday.

EU leaders again called time on their heated talks for a shared economic stimulus package to recoup the damage caused by the coronavirus pandemic for the third night in a row, European Council spokesperson Barend Leyts said early Monday.

"On day 4 of #EUCO [European Council President Charles Michel] has ended plenary meeting. #EU27 will reconvene later today at 2pm [1200 GMT]," Leyts tweeted, after the meeting unexpectedly dragged to nearly 6 am.

Initially scheduled to meet on Friday and Saturday, the 27 leaders added two extra nights and days to bridge the clefts between them, but EU diplomats remained uncertain whether they would succeed in doing so.

A source from the delegation of a large Member State accused the so-called Frugal Four states - Austria, the Netherlands, Sweden and Denmark - of blocking progress in the marathon talks in the early hours of Monday. Nevertheless, other diplomats said a compromise may possibly be emerging, involving adjustments to the proportion of grants to loans in the recovery plan.

On the table lies a €750bn ($855bn) proposal to help countries deal with the economic havoc the coronavirus pandemic caused and a €1.074trn seven-year-budget for the EU.

The major issues hampering agreement so far include the overall size of the budget, how to supervise its expenditure, what balance of loans and grants the money should be paid out as, and how to embed a mechanism tying access to funds with compliance with rule of law standards.

Just before dinner, the Frugal Four - plus newest addition Finland - suggested reducing the overall size of the recovery plan from €750bn to €700bn, EU diplomats told dpa. They are also opposed to paying this money in grants.

After days of negotiations, they perhaps reluctantly suggested splitting the difference between grants and loans equally to €350bn on each side. A previous suggestion by Michel had foreseen €450bn to be paid out in grants and €300bn in loans.

But according to EU diplomats, this suggestion did not gain much ground with other EU countries. Italy, Spain, Germany and France saw €400bn as the minimum amount of grants, they told dpa.

EU sources told dpa on Sunday evening that Michel suggested to further reduce the grants to €400bn.

Another big issue on the leaders' plates is the one of tying rule of law conditions to the budget, designed to indirectly target democratic backsliding in Poland and Hungary. Hungarian Prime Minister Viktor Orban refused to budge on his conviction to not accept any deal that included a rule of law mechanism.

He argued that such a mechanism, as suggested by some countries, especially the Netherlands, would require treaty amendments.

"So we have to clarify that if the deal is blocked, it's not because of me, but because of the Dutch guy, because he initiated something," he said.

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