The 27 heads of state and European Union governments met in Brussels on Monday for the fourth day in a row as they tried to unite behind the controversial post-corona virus aid fund and the EU multinational budget.
Despite long negotiations and little sleep, German Chancellor Angela Merkel sounded a bit more confident than she did the first three days of the summit when she arrived again at the Europa building, chair of the European Union Council, ahead of Monday’s round of talks.
“There is hope that maybe an agreement can be reached today, or at least a possible agreement,” he said.
“It’s clear the negotiations will be very difficult, and they will continue today.”
The only longer-lasting summit was in December 2000, in Nice, France, on the topic of European Union budget and reform: Talks lasted four days and nights.
Angela Merkel arrived Monday morning at the European Union Council, for the fourth day in a row
At that time, only 15 member countries were involved in the dispute. Today’s challenges are far greater, EU diplomats said.
“But an extraordinary situation also requires extraordinary efforts,” said Merkel, who is currently president of the European Union Council. “I hope we will discuss the remaining distance, which will not be easy.”
The biggest EU economic crisis needs to be overcome. The proposed financial package, with a total of € 1.8 trillion ($ 2.05 trillion), is the largest to be negotiated.
“It’s better to take more time than less,” said a European Union diplomat. European Central Bank President Christine Lagarde also told participants to take their time and do it right rather than just being quick about it. Like many other observers, Lagarde assumes the European Union will even need a second special summit to get an unprecedented recovery fund and is running.
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Rest for a while, back to the negotiating table
Camps discuss budget disputes throughout Sunday night to Monday. In the early hours of the morning, Charles Michel, president of the European Council and permanent chair of the summit, decided that negotiations had progressed so far that conclusions would be possible on the fourth day of the summit. Everyone agreed to sleep and meet again in the afternoon for the next round.
Little is known about the details of the negotiations; several EU diplomats have submitted confidential information. Heads of state and government were mostly silent when they left the summit building.
Charles Michel (left) negotiates with European Union Eastern European counterparts
Some debates were reported to be loud and hot. French President Emmanuel Macron threatened to leave the summit and is said to have banged his fist on the table angrily at the “shopkeeper’s soul” from the north, “a reference to most northern European countries who want strict conditions attached to the package.
However, on the fourth day, Macron seemed calmer. “There is hope for compromise, but I remain very cautious,” Macron said. He warned that Europe must not forget its grand goals including climate policy, digitalization and European sovereignty.
Smaller stimulus package
The conflict between the “five savers” – Austria, the Netherlands, Denmark, Sweden and now Finland – and the recipient countries remains unresolved. The original “save four” becomes five when Finland officially joins the group.
“This naturally strengthens our negotiating position,” Austrian Chancellor Sebastian Kurz said. He has repeatedly mentioned that he must protect the interests of Austrian taxpayers above all else.
Italian Prime Minister Giuseppe Conte, whose country will benefit greatly from the proposed coronavirus recovery plan, accused Dutch Prime Minister Mark Rutte of playing a hero to gather domestic votes. In the long run, Europe will suffer greatly from Dutch resistance to the size and structure of recovery funds, Conte said.
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French President Emmanuel Macron reportedly struck his fist in anger at ‘saving five’
The European Commission along with European Council President Michel has proposed financing a € 750 billion recovery fund through a first European Union joint loan, with € 500 billion to be distributed to member countries in the form of grants to improve their economies affected by coronavirus. . The remaining € 250 billion will be in the form of loans.
After three days of talks and pressure from “saving five,” which will be a net contributor, a compromise proposal is now on the table. It estimates reducing the recovery fund to € 700 billion, with subsidies shrinking to € 390 billion.
Spain and Italy have long opposed this reduction in subsidies and can count France and Germany, the two largest net contributors, on their side. Chancellor Merkel had previously argued that the funds must be large enough to truly drive Europe’s economic recovery over the next three years.
Viktor Orban from Hungary opposes proposals relating to the rule of law
Another area of contention is the criteria that will be used to determine the “needs” of countries affected by the coronavirus crisis.
The Netherlands and other net contributors demand tight control over spending. They want to make it possible for one member state to veto and thus stop projects funded by EU subsidies in other countries, such as Italy. Italy and other recipient countries oppose this.
Hungarian Prime Minister Viktor Orban sided with Italy, accusing the Dutch prime minister of doing something to the Hungarian people.
EU lawyers are working on veto solutions that are acceptable to both parties.
Another contentious issue is the “rule of law” criterion for future distribution of grants. Most member states support it as a means to encourage Hungary and Poland to comply with the rule of law, while Hungary and several Eastern European countries are strongly opposed. This is another area of financial package where compromise must be found.