In the absence of agreement on the recovery plan, the European summit continues

After two days of tough negotiations, the 27 European leaders will meet again in Brussels on Sunday to overcome their deep differences over the EU’s recovery plan linked to the crown virus crisis.

Since Friday, “sparse” resists. The Netherlands and its allies are not giving in to talks from Germany and France, which are unsuccessfully trying to persuade them to sign a recovery plan that would benefit the countries most affected by the pandemic, Spain and Italy. Faced with the lack of compromise, the 27 will play extra time on July 19 and once again try to reach an agreement.

At the negotiating table is a fund consisting of a borrowing capacity of € 750 billion, supported by the EU’s long-term budget (2021-2027) of € 1,074 billion. Agreement on the 27 Member States is required, a compromise is particularly difficult.

France and Germany save no effort

German Chancellor Angela Merkel, whose country has held the presidency of the Union since July 1, and French President Emmanuel Macron have worked hard to adopt this plan, made it increasingly urgent as Europe was threatened with a historic recession.

After a dinner on Saturday, the President of the Council, the leader of the summit, Charles Michel, the French president, the German chancellor, gathered the leaders of the four “frugal” (Netherlands, Austria, Denmark and Sweden) to which Finland is annexed.

“This meeting was very difficult,” said two European sources. Merkel and Macron stopped leaving the meeting for an interview at their hotel with Italian leader Giuseppe Conte, according to a diplomatic source. The chancellor and the French president will meet with Charles Michel on Sunday morning to decide on the course to follow, says a diplomatic source.

Possible modification of the distributions

On Saturday, Charles Michel presented three new proposals, mainly concessions for “frugal”. Firstly, the increase in rebates that these countries benefit from, a kind of gift that lowers their national contribution to the European budget. But for Austria it is still not enough. “Discounts for Austria have increased. It is not enough, we want a little more. But the direction is good,” said Sebastian Kurz, the Austrian chancellor.

The Chairman of the Board also proposes to change the distribution between grants and loans; the “frugal” prefers loans over grants. The new plan still includes an amount of 750 billion euros, but with funds consisting of 300 billion loans and 450 billion in grants (against a 250-500 quota initially). However, Paris and Berlin refused to reduce subsidies below 400 billion.

The last concession concerns the management of this recovery plan. Liberating countries demand to be able to withhold payments if they believe that the money is being misused by southern countries. The President-in-Office of the Council develops a mechanism which enables any State which has doubts about the use of this money to convene a debate before the European Council. But the southern states fear that this would force them to submit to an introduced reform program (labor market, pensions, etc.).

Charles Michel should present a new proposal on Sunday, following the overnight talks.

With AFP