E.U. Leaders Seek Compromise on Unprecedented $2.1 Trillion Budget and COVID-19 Recovery Fund

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A full day and night of discussions by the 27 leaders on Friday only added to the irritations over how the huge sums should be spent and what strings should be attached.

The atmosphere “was grumpier” as the talks went on, Dutch Prime Minister Rutte said after Friday’s marathon talks. “This is going to take a while, I think.”

The EU executive has proposed a 750-billion euro fund, partly based on common borrowing, to be sent as loans and grants to the most needy countries. That comes on top of the seven-year 1-trillion-euro EU budget that leaders were fighting over when COVID-19 slammed their continent.

The summit broke up around lunchtime Saturday so that each delegation could discuss the new proposals from host Charles Michel, according to a European diplomat.

The new proposals reduce the proportion of straight-out grants in the rescue package and raise the proportion of loans that will need to be paid back, in an apparent nod to a grouping of “frugal” nations led by the Netherlands, the diplomat said.

But the issue of how to track the rescue money remains the key sticking point, the diplomat said. Michel proposed a measure that would stop short of allowing any country a veto on how governments spend the money.

Another diplomat described Michel’s new proposals as just the first step in what could be a long journey to agreement. Both diplomats spoke on condition of anonymity because they were not authorized to publicly discuss the closed-door negotiations.

Rutte is seen as a leader of four “frugal” nations that want conditions such as economic reforms attached to EU handouts to help countries recover from the hammer blow of the coronavirus.

He met Saturday ahead of the summit for crisis talks with German Chancellor Angela Merkel, French President Emmanuel Macron, Italy’s Giuseppe Conte as well as the leader of the EU’s executive, Ursula von der Leyen, and Michel.

One of Rutte’s allies, Austrian Chancellor Sebastian Kurz, said the talks were not totally stalled. “There is more and more movement in our direction,” he told ORF television.

The pandemic sent the EU into a tailspin with 27-nation bloc’s economy contracting by 8.3% this year, according to the latest predictions. Around 135,000 of its citizens have died from COVID-19.

As leaders met in person for the first time since February, they wore face masks, bumped elbows and sat in a cavernous meeting hall so they could maintain social distancing. Many of their negotiating positions were further apart than their chairs.

After two fruitless sessions Friday, summit host and European Council President Charles Michel met key players – Rutte, French President Emmanuel Macron and Hungary’s Viktor Orban – in an attempt to narrow the gaps between them. Orban does not want strings attached to EU funds, Rutte does and Macron is arguing that Europe must show solidarity to claw its way out of the crisis.

Michel is expected to present leaders with possible compromises when the summit resumes, though it remains to be seen if they can reach agreement or will have to schedule another meeting.

Czech Prime Minister Andrej Babis was pessimistic after the first day.

“I don’t have the impression that we are getting close to an agreement,” he said.

Rutte, however, said that despite the mounting acrimony, the talks were creeping forward.

“You make a bit of progress during the day,” he said. “For a start, it helps if you better understand each other’s positions, then you can search for possible compromises.”

Source: Time

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