Sunday. 05.02.2023

EU leaders push recovery fund talks into Monday afternoon

A source from the delegation of a large member state accused the so-called frugal states of blocking progress in the marathon talks in the early hours of Monday.
Dutch Prime Minister Mark Rutte, Austrian Chancellor Sebastian Kurz, Finnish Prime Minister Sanna Marin, Danish Prime Minister Mette Frederiksen and Swedish Prime Minister Stefan Loefven meet on the sidelines of the European Council special summit, held to discuss a shared economic recovery plan. Photo: Mario Salerno/European Council/dpa.
The leaders of the so-called frugal countries, in Brussels. Photo: Mario Salerno/European Council/dpa.

EU leaders again called time on their heated talks for a shared economic stimulus package to recoup the damage caused by the coronavirus pandemic for the third night in a row, European Council spokesperson Barend Leyts said early Monday.

"On day 4 of #EUCO [European Council President Charles Michel] has ended plenary meeting. #EU27 will reconvene later today at 2pm [1200 GMT]," Leyts tweeted, after the meeting unexpectedly dragged to nearly 6 am.

Initially scheduled to meet on Friday and Saturday, the 27 leaders added two extra nights and days to bridge the clefts between them, but EU diplomats remained uncertain whether they would succeed in doing so.

A source from the delegation of a large member state accused the so-called Frugal Four states - Austria, the Netherlands, Sweden and Denmark - of blocking progress in the marathon talks in the early hours of Monday.

But other diplomats said a compromise may possibly be emerging, involving adjustments to the proportion of grants to loans in the recovery plan.

On the table lies a 750-billion-euro proposal to help countries deal with the economic havoc the coronavirus pandemic caused and a 1.074-trillion-euro seven-year-budget for the EU.

While the heads of government were initially set to reconvene at 12 pm on Sunday, the political leaders only got to see each other in the big group in the evening after bilateral talks went on throughout the day.

The major issues hampering agreement so far include the overall size of the budget, how to supervise its expenditure, what balance of loans and grants the money should be paid out as, and how to embed a mechanism tying access to funds with compliance with rule of law standards.

Finland with the frugal

Just before dinner, the Frugal Four - plus newest addition Finland - suggested reducing the overall size of the recovery plan from 750 billion to 700 billion euros, EU diplomats told. They are also opposed to paying this money in grants.

After days of negotiations, they perhaps reluctantly suggested splitting the difference between grants and loans equally to 350 billion euros on each side. A previous suggestion by Michel had foreseen 450 billion euros to be paid out in grants and 300 in loans.

But according to EU diplomats, this suggestion did not gain much ground with other EU countries. Italy, Spain, Germany and France saw 400 billion euros as the minimum amount of grants.

EU sources told on Sunday evening that Michel suggested to further reduce the grants to 400 billion euros.

Another big issue on the leaders' plates is the one of tying rule of law conditions to the budget, designed to indirectly target democratic backsliding in Poland and Hungary. Hungarian Prime Minister Viktor Orban refused to budge on his conviction to not accept any deal that included a rule of law mechanism.

He argued that such a mechanism, as suggested by some countries, especially the Netherlands, would require treaty amendments.

"So we have to clarify that if the deal is blocked, it's not because of me, but because of the Dutch guy, because he initiated something," he said.

EU leaders push recovery fund talks into Monday afternoon