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No agreement on EU recovery fund after all-night meeting
After a night of negotiations, European Heads of
Government have still not reached an agreement on the European Recovery Fund
and the multiannual budget. This while the summit should have ended on
Saturday.
Peter Giesen20
july 2020, 9:00
"There is
still a lot of work to be done, but we are not there yet," Prime Minister
Rutte said this morning, just after 6 a.m. 'It didn't look good a few times.
The summit has been very close to failure. And he can still fail."
Nevertheless, the
Prime Minister showed himself to be 'a little more hopeful'. Charles Michel,
the President of the European Council, will now write a new compromise
proposal. European leaders will continue to talk on Monday at 4 p.m.
The summit
started on Friday and should have been concluded by Saturday with an agreement.
On the night of Sunday to Monday, the main battleground was the composition of
the EUR 750 billion recovery fund, which will help the countries most affected
by the corona crisis. France and Germany want a fund that consists of 500 billion
euros of subsidies and 250 billion loans.
The 'greedy four'
(The Netherlands, Austria, Denmark and Sweden) and Finland were initially
completely opposed to subsidies, but were prepared to go up to 350 billion on
Sunday. For French President Macron and
German Chancellor Angela Merkel, who were backed by 20 other leaders, 400
billion was the bare minimum. Charles Michel, the President of the European
Council, would now be working on a compromise proposal that would allocate EUR
390 billion in subsidies. Rutte declined to comment on these amounts on Monday
morning.
The Netherlands
also wants to be able to force countries such as Italy to reform their
economies in exchange for subsidies and reforms. According to Prime Minister
Rutte, there is now a 'good proposal' from Michel on enforcing reforms in
countries that receive a grant or loan from the fund.
If countries fail
to reform their economies, European heads of government can pull the 'emergency
brake' and cut benefits from the fund. Italy and other southern countries
oppose this interference in their economic policies, but ultimately seem to
agree.
There is also
disagreement about linking the fund to the rule of law. Most leaders want to
make grants and loans dependent on compliance with the rule of law. Hungary,
Poland and Slovenia oppose this.
Extremely
difficult
On Sunday
evening, the negotiations were extremely difficult. President Charles Michel
made an emotional appeal to the leaders: 'Are we able to build Europe on unity
and trust? Or do we, with a scar, show the face of a Europe weakened by
suspicion?', Michel said at dinner. Rutte was not impressed by this call on
Monday morning. 'I really like Charles Michel, but we're negotiating in
business.'
When the
negotiations threatened to stall, their opponents said the frugal countries
began to talk a little too ostentatiously about complying with the rule of law
as a condition for benefits from the fund. According to one diplomat, Michel,
Merkel and other leaders were angered by the impression that the frugal
countries wanted to use the rule of law to pass on the failure of the summit to
Hungary and Poland.
Michel said he
was willing to talk further, provided there was a need for a solution. The
'frugal' countries did not respond, according to the diplomat concerned, to
which Michel suspended the meeting for a 45-minute break at 11.30pm on Sunday
evening. Those 45 minutes then turned out to last all night: it wasn't until
6:00 a.m. that the leaders got back together.
Inflexible
Prime Minister
Rutte was widely criticized last weekend for his intransigent attitude.
President Macron said that the
Netherlands has taken the place of the United Kingdom as a country that always
says no. Chancellor Merkel was also annoyed by Rutte's stance.
The Italian Prime
Minister Conte would have told Rutte that his tough stance might make him a
hero at home, but would ultimately be held responsible by all Europeans for
blocking an adequate response to the corona crisis. Hungarian Prime Minister Orbán
said he did not understand 'why Rutte hates me and Hungary so much'.
"I don't
care," the Prime Minister said on Monday morning. Harsh language, he says,
is part of negotiating. 'I fight for the interests of Dutch citizens, for a
stronger Netherlands and a stronger Europe. I don't let sounds like that
distract me.'
The leaders will
meet again on Monday afternoon. Optimism about an agreement has increased.
"Tough negotiations have just ended, and we can be very pleased with
today's result," Austrian Chancellor Kurztweeted. "We'll move on this
afternoon."
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Emotions raw as EU budget summit stretches into
fourth day
Charles Michel proposes compromise on coronavirus
recovery fund but deal not done yet.
At one point, Macron leveled what might be the
harshest insult possible in the post-Brexit European Council, likening Rutte
and the frugals to obstructionist Britain. “You are taking the seat of the U.K.
around the table!” he thundered.
By DAVID M.
HERSZENHORN AND RYM MOMTAZ 7/20/20, 5:25 AM CET Updated 7/20/20, 7:59 AM CET
Anger
flared and emotions ran high Sunday after EU leaders struggled through a third
day of negotiations over plans for a landmark €1.82 trillion
budget-and-recovery package.
In one of
the more electric moments, French President Emmanuel Macron lashed out at
Austrian Chancellor Sebastian Kurz, who had walked out of the leaders'
gathering to take a phone call.
“You see?
He doesn’t care. He doesn’t listen to others, has a bad attitude," Macron
said, deriding Kurz, who is part of a self-described frugal faction that has
pushed to shrink the overall size of the budget plan and reduce the amount of
grants to be given to countries to help them recover from the coronavirus
crisis. "He handles his press and basta!" Macron said.
As the
clock struck midnight, the summit entered its fourth day, making it one of the
longest in the bloc's history. But leaders were still deadlocked on the core
question of the size of a proposed economic recovery fund.
They
continued talking in small groups through the night and appeared to be closing
in on a compromise. At around 5:30 a.m., European Council President Charles
Michel gathered the leaders briefly and told them he would propose that the
recovery fund pay out €390 billion in grants.
There was
no immediate word, however, on whether everyone would sign up to that number
and other details remained to be resolved. The leaders are due to reconvene at
4 p.m. to try to work through the remaining sticking points.
The planned
amount of grants, to be financed by an unprecedented amount of joint debt,
would be markedly less than the €500 billion proposed by France and Germany and
by the European Commission. But an agreement to create the program at all was a
concession by countries like the Netherlands that had entered the talks opposed
entirely to taking on debt to issue grants.
Leaders
also jousted over an array of other issues, especially the system governing how
recovery money would be disbursed, and the possibility of a provision that
would allow the European Council, by qualified majority vote, to block the flow
of EU funds to any country found not to be upholding the rule of law.
Following a
relatively early and unceremonial dinner on Sunday evening, leaders intensified
their discussion and at times emotions seemed to spill over. At that point, the
summit had already gone on a day longer than planned.
Michel, who
presided over the three days of excruciating negotiations, delivered a speech
in which he cited the number of coronavirus fatalities, and implored leaders to
reach a deal that would send a positive message to European citizens and the
world.
“The
question is therefore the following: Are the 27 leaders responsible to the
peoples of Europe capable of building European unity and trust,” Michel asked.
“Or, through a tear, will we present the face of a weak Europe, undermined by
mistrust?”
“Throughout
the negotiations, I listened to everyone, showed the utmost respect,” Michel
continued. “My wish is that we will reach an agreement and that European
newspapers will headline tomorrow on the fact that the EU has achieved an
impossible mission. This is what I have in my heart.”
But as
anxiety that talks might collapse spiked at various points during the day,
there were some unexpected external interventions, including by European
Central Bank President Christine Lagarde, who appeared to be telling the
leaders not to worry about the possibility of an adverse reaction in the
financial markets if they did not reach a deal by Monday morning.
Although
she was not present at the talks, Lagarde weighed in by telling Reuters news agency
that it would be better for leaders to deliberate longer and reach an
"ambitious" result along the lines of the European Commission's €750
billion plan including €500 billion in grants, than to seal a quick agreement.
Lagarde's
surprise statement came after some national delegations complained of pressure
and fear-mongering around the possibility of turmoil in the markets.
The
European Commission also intervened, with infographics circulating among the
national delegations that showed the benefits of being part of the EU's single
market far outweighing the budget contributions of individual countries —
especially countries that pay more into the budget than they get back.
The data
appeared to be a reminder to the so-called Frugal Four — Austria, Denmark, the
Netherlands and Sweden — which had been pushing hard both to shrink the overall
size of the package as well as to increase the rebates that are used to cap
their annual budget contributions.
"One
graphic is worth one thousand negotiating hours," Elisa Ferreira, the
European commissioner for cohesion and reforms, declared pointedly in a tweet
that included four charts.
At one
point, Macron leveled what might be the harshest insult possible in the
post-Brexit European Council, likening Rutte and the frugals to obstructionist
Britain.
By far the
fiercest point of contention was the size of the recovery fund and the mix of
grants and loans. Macron and German Chancellor Angela Merkel had first put
forward their proposal for €500 billion in grants, financed by joint debt, back
in May.
And
throughout Saturday and Sunday, Macron had aggressively pushed back against
efforts by the frugal leaders to reduce the size of the grants program, putting
him in direct conflict with Kurz and Dutch Prime Minister Mark Rutte, who were
similarly adamant in their positions.
That led to
Macron's explosive intervention late Sunday.
At one point, Macron leveled what might be the
harshest insult possible in the post-Brexit European Council, likening Rutte
and the frugals to obstructionist Britain. “You are taking the seat of the U.K.
around the table!” he thundered.
"You
might take me for a nutcase with my grants, OK, but even Angela is with me,”
Macron said at another point, drawing laughter from some, including Merkel
herself, according to officials.
Dutch officials,
meanwhile, expressed their own exasperation with Italian Prime Minister
Giuseppe Conte for digging in his heels on the question of a governance
mechanism to determine how recovery money would be disbursed.
Lili Bayer,
Maïa de La Baume, Andrew Gray, Hans von der Burchard and Jacopo Barigazzi
contributed reporting.
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