EU leaders struggle into third day of budget and
recovery talks
Major issues yet to be resolved at Brussels summit.
By DAVID M.
HERSZENHORN, LILI BAYER, RYM MOMTAZ AND HANS VON DER BURCHARD 7/19/20, 3:38 AM
CET Updated 7/19/20, 3:53 AM CET
European
Council President Charles Michel's so-called "super emergency brake"
was designed to yield a breakthrough. But as of late Saturday night, EU
leaders' negotiations over a landmark €1.82 trillion budget and recovery
package were still stalled.
One of the
main points of dispute was a governance mechanism to ensure that countries meet
the requirements for receiving money from a coronavirus recovery fund.
The fight
over governance was among the most intractable of a long list of outstanding
disagreements among EU heads of state and government after their second day of
brokering over the proposed new long-term budget and economic recovery
initiative.
Some
officials and diplomats said the atmosphere on Saturday was better than Friday
and that leaders were inching ever so slowly toward a deal. Michel adjourned
the session after dinner, and called for a third day of talks to begin at noon
on Sunday.
"The
deliberations are at an important stage," an official in the German
delegation said. "It cannot yet be said whether there will be a solution
tomorrow. But it is worth continuing the work, because there is a broad
readiness among the member states to find a solution."
The
deadlock on governance seemed even tougher than the fight over the size of the
budget and recovery fund.
Clearly, it
will not be easy.
Late
Saturday, a post-dinner meeting between German Chancellor Angela Merkel, French
President Emmanuel Macron and leaders of the so-called Frugal Four — Austria,
Denmark, the Netherlands and Sweden — as well as their ally Finland, ended in
some acrimony over demands by those countries for further cuts to the signature
recovery initiative: a grants program financed by joint EU borrowing.
Momentum
Michel
created some momentum Saturday morning by nodding to the frugals' demands and
reducing the grants portion of the proposed recovery fund as part of a broader,
65-page revised proposal designed to break the deadlock.
According
to Michel's revised plan, the core seven-year EU budget remained at the
proposed level of €1.074 trillion. The size of the recovery fund would remain
at €750 billion, but the level of grant funding was reduced to €450 billion
from €500 billion.
That,
however, was apparently not enough for the frugal countries.
“There has
been movement in the right direction but there is still a long way to go
tomorrow,” Austrian Chancellor Sebastian Kurz tweeted at 1:41 a.m.
Macron, in
turn, was firmly resisting demands from the frugals to reduce the grants
portion of the package below €400 billion, officials said.
A French
diplomatic official said that Macron, Merkel and Italian Prime Minister
Giuseppe Conte would meet Michel at 9:30 a.m. Sunday before all the leaders
reconvene.
The
official held open the possibility that the trio might not go on to the session
with all the leaders if they felt a deal could not be done due to frugal
opposition. But German officials had previously made clear the chancellor would
be there.
The
deadlock on governance seemed even tougher than the fight over the size of the
budget and recovery fund.
Dutch Prime
Minister Mark Rutte has demanded that the disbursement of recovery money be
approved unanimously by all 27 EU countries — a position that the Commission
and Council say is legally not feasible, and that some countries including
Italy and Spain strongly opposed.
France's
President Emmanuel Macron speaks with President of the European Council Charles
Michel during an EU summit at the European Council building in Brussels, on
July 18, 2020 | Pool photo by Francois Lenoir/AFP via Getty Images
Michel, in
a bid to fashion a compromise on Saturday, proposed the "super emergency
brake," by which any country could slow the disbursement of recovery funds
by bringing any objection to the heads of state and government on the European
Council, or to EU finance ministers.
Dutch
officials said Michel's plan was a step in the right direction. But Prime
Minister Mark Rutte signaled it was not enough.
Conte, in
particular, pushed back hard on Rutte.
“I have a
good personal relationship with Rutte," Conte told reporters outside his
hotel late Saturday night. "Then the fight is very hard. We are colliding
these days in a very hard, very tight way."
Conte said
that Italy still preferred the Commission's original proposal on governance,
which is more lax than Michel's compromise plan.
Conte said
Rutte's unanimity requirement would be a violation of the EU treaties. “The
problem is that when we then go to operate this system of checks and controls,
it must first be a system compatible with the treaties," Conte said,
adding: ”On this, I am absolutely uncompromising."
A senior EU
diplomat monitoring the leaders' negotiations said overall the atmosphere on
Saturday was positive, but that there were clear obstacles. "Mood was
better tonight than yesterday," the senior diplomat said. "Not much
progress. Still stuck on governance."
One
diplomat from a frugal country echoed the sense that there was some progress.
"I think we are getting closer," the diplomat said, "but some
heads of state are not happy."
Spain's
Prime Minister Pedro Sanchez speaks with Netherlands' Prime Minister Mark Rutte
prior to the start of the EU summit on July 18 | Pool photo by Francisco
Seco/AFP via Getty Images
A senior
official from a southern European country said that not all leaders appeared to
be bargaining in good faith. "Some are here to present their show with no
will to compromise," the official said, while others "really want to
finalize this deal."
Coronavirus
impact
To that
end, Michel was expected to put forward yet another revised overall package on
Sunday. That package would add other further refinements to changes he proposed
Saturday, which included the cut in grants.
To lower
the amount of grant funding, Michel is proposing reductions to several budget
programs from his previous blueprint. Among those affected would be the Horizon
Europe research program (a cut of €2 billion), the health program (a cut of
€2.7 billion) and rural development funding (a cut of €5 billion). A planned
€26 billion pot to support the solvency of companies would be eliminated.
Michel also
added other sweeteners intended to assuage the frugals, including increases in
rebates that have been used as a way to cap the overall contributions of
countries that pay the most into the EU's common budget.
Michel
proposed an increase of €50 million in Austria's annual budget rebate, as well
as an extra €25 million in rebates per year for Denmark and Sweden.
He also
suggested raising the amount of EU customs revenues that countries can keep —
from 15 percent proposed earlier this month to 20 percent. That's a major win,
and a major windfall, for the Netherlands, which operates some of Europe's
busiest ports.
Following
intense opposition from some countries to how recovery funds would be
allocated, Michel proposed that a new formula be used for the €325 billion of
grants to be given to countries under the Recovery and Resilience Facility.
That change
was designed to respond to concerns that previous proposed formulas gave too
much to some countries and not enough to others — and also were not closely
enough linked to the impact of the coronavirus crisis.
“I think
that a deal is possible tomorrow, but there are still big questions
remaining" — Dutch Prime Minister Mark Rutte
Allocations
of these grants in 2021-2022 would be made using the original formula, which is
based on unemployment data for 2015 to 2019. But in 2023 the historical
unemployment figures would no longer matter, and money would be distributed
based on the loss of GDP in 2020 and 2021, according to the new text.
Some top
policy priorities were carefully preserved in Michel's new proposal, including
the EU's focus on fighting climate change, with 30 percent of the EU’s
long-term budget and recovery fund earmarked for climate action.
But in a
sign of the numerous outstanding issues, a dinner discussion on a proposed
mechanism to link payouts of EU funds to respect for the rule of law was
inconclusive, and it was unclear how Michel would navigate continuing
disagreement on that and other topics on Sunday.
Rutte,
speaking to reporters after 2 a.m., said leaders were struggling to find a
landing zone but expressed cautious hope. “I think that a deal is possible
tomorrow, but there are still big questions remaining," Rutte said,
adding, "The fact that we continue to talk shows that we have
optimism."
Florian
Eder and Paola Tamma contributed reporting.
Sem comentários:
Enviar um comentário