EU summit: Talks entering ‘crucial phase’ as leaders meet for fourth day

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FRANCOIS LENOIR / POOL / AFP

Marathon negotiations between European leaders on a massive coronavirus recovery package are now entering the “crucial phase”, Commission President Ursula von der Leyen said as talks resumed on Monday afternoon for a fourth consecutive day.

German Chancellor Angela Merkel said as she walked into the negotiation room that leaders have agreed on “a framework for a possible agreement”.

Leaders left the summit early Monday morning without an agreement and resumed talks at 16:00 CEST. The summit was originally planned to end on Saturday.

Von der Leyen told reporters that “after three days and three nights of negotiation marathon, we’re entering now in the crucial phase but I have the impression that European leaders really want an agreement.”

“I’m positive for today, we’re not there yet but things are moving in the right direction,” she added.

‘Exceptional efforts’

Talks have focussed on a proposed €1.68 trillion package, a seven-year budget and a coronavirus recovery fund.

Eastern Europe leaders have opposed attaching rule of law conditions, while southern European countries are rejecting demands from the so-called frugal four, now five, countries — Netherlands, Austria, Finland, Sweden and Denmark — for a large share of the package to be bound by economic reform requirements.

Merkel reaffirmed her support for “substantial parts of grants” to be handed out to countries most severely-hit by the economic impact of the COVID-19 pandemic.

“That is the answer we need for an exceptional situation,” she said, adding: “exceptional situations also require exceptional efforts”.

‘Diametrically opposed’

Dutch Prime Minister Mark Rutte has provided the strongest opposition to the plans on the table — said to be insisting on a cap of €350 billion worth of grants — preferring loans of strict conditions.

The recovery fund had originally set €500 billion to be handed out as grants and €250 billion in loans.

He also told reporters ahead of the latest round of negotiations that the Frugals “are fighting for clear reforms, if necessary, in all member states. We are fighting to maintain the rebates…We are all negotiating in a very tense situation for Europe, so everyone at any moment can be agitated.”

Differences were so great that Sunday’s resumption of talks by all 27 leaders together was pushed back several hours as small groups worked on new compromise proposals.

“The actual size of the package in terms of the scale of the package and the balance within the package between grants and loans, that’s where significant disagreement still remains, notwithstanding movement yesterday and overnight,” said Irish Taoiseach Micheál Martin.

Luxembourg Prime Minister Xavier Bettel said in his seven years’ experience of European meetings he “had never seen positions as diametrically opposed as this.”

“This is really a very, very difficult negotiation because it is not only about this one new set of big money, but it really changes the contours of monetary union,” Guntram Wolff, Director of the Bruegel economic think tank in Brussels, told Euronews.

“It’s the first time the EU borrows money to give it as grants to countries. So it’s really a game-changer in terms of how this monetary union, how this European Union works.”

EU Council President Charles Michel, who chairs the negotiations, urged leaders to set aside disagreements on Sunday night.

“Are the 27 EU leaders capable of building European unity and trust or, because of a deep rift, will we present ourselves as a weak Europe, undermined by distrust,” he said in a copy of the speech obtained by the Associated Press.

Resistance from ‘the Frugals’

The new plan presented by the Council chief was designed to offer concessions to the Dutch position.

The Dutch, along with the other “Frugals,” are in favour of a larger share of repayable loans, rather than grants, and they want more conditions and control over how the money is spent.

The amount in grants was thus reduced to €450 billion and an “emergency brake” was added to the mix. It would have allowed a member state to put a stop to the disbursement of funds until EU leaders met to discuss how money was being spent in another member state.

Italian Premier Conte said however that the emergency brake from both a legal and political point of view “is not very practicable.”

Rule of law

Another point of contention is the potential addition of a rule of law conditionality to accessing the funds. The proposed measure could predominantly impact eastern European countries and especially Poland and Hungary.

Warsaw and Budapest have drawn the ire of Brussels over the past couple of years and been condemned by the European Court of Justice over what is seen as attacks on the independence of the judiciary, media freedom and the treatment of refugees in Hungary.

Hungarian has threatened to veto the recovery package if such conditionality is added to the recovery package.

Yet on Sunday, Hungarian Prime Minister Viktor Orbán told reporters: “What’s going on is a little bit strange because there is a 100 per cent agreement on the rule of law.

“If somebody is not ready to accept the rule of law, (they) should leave the European Union immediately. It should not be punished by money or something other than say ‘goodbye son, goodbye guys’ because this community is based on the rule of law. And we like that approach, it’s ok,” he said.

For the leaders of countries hardest-hit by the coronavirus economic fallout, mostly around the Mediterranean, there is no time to lose in securing a package to shore up eurozone economies.

A warning came from the EU’s budget commissioner that the pandemic is not over. Johannes Hahn tweeted on Saturday that infections may rise in some countries, so it was “high time to reach an agreement which allows us to provide the urgently needed support for our citizens and economies”.

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