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Dublin: 14°C Wednesday 25 May 2022

'A moment of truth': EU Summit to resume amid deadlock over €750 billion Covid rescue plan

The 27 leaders are scheduled to reconvene at 11am local time.

belgium-europe-summit German Chancellor Angela Merkel greets Cypriot President Nicos Anastasiades yesterday Source: AP/PA Images

EU LEADERS WILL meet again today to try to salvage a huge post-coronavirus economic rescue plan amid defiance from “frugal” countries led by the Netherlands and Austria.

Europe is in the depths of its deepest recession since World War II and the 27 national leaders are seeking common ground on the terms of a €750 billion stimulus package that would help lift those hardest hit by the pandemic.

But 12 hours of difficult haggling on Friday failed to yield a result as Dutch Prime Minister Mark Rutte refused to give ground on his demand for strict controls on payments to his struggling southern partners.

Rutte’s position has been backed to varying degrees by fellow members of the so-called ‘Frugal Four’ of Sweden, Denmark and Austria, while Finland has also been calling for cuts to the package.

The 27 leaders are scheduled to reconvene at 11am local time, but diplomats are increasingly gloomy about the prospect of a deal being struck this weekend.

The Frugal Four are reluctant to give money to countries such as Spain or Italy whom they see as too relaxed about public spending.

Germany’s Chancellor Angela Merkel and French President Emmanuel Macron are backing a package of loans and subsidies to member states to revive economies shattered by the virus and preventive lockdowns.

As she arrived for the summit – the first to be held in person since the pandemic began – Merkel warned that the differences among the leaders were “very very large”, while Macron described it as a “moment of truth”.

According to diplomatic sources, European Council president and summit host Charles Michel had suggested granting the members a form of “emergency brake” on payments, to appease the Dutch.

This would enable governments to call a summit if they have concerns about a national economic plan, but other members insisted it must not amount to giving the Dutch a veto over recovery measures.

“We’ll have to restart things differently,” one senior diplomat said, of Saturday’s talks.

‘Difficult to swallow’

Another diplomat from a non-frugal state warned: “What the Netherlands wants is legally impossible and politically difficult to swallow.”

Before the talks Rutte insisted he wanted to show solidarity with countries that don’t have the budget to stoke a meaningful recovery.

“But at the same time, you can also ask those countries to do everything possible to solve this yourselves the next time. And you do this through reforms, in the labour market, in pensions etc,” he added.

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The draft plan put forward by Michel, foresees a recovery package, made up of €250 billion in loans and €500 billion in grants and subsidies that would not have to be repaid by the recipient member states.

This package is in addition to the planned €1,074-billion seven-year EU budget from 2021 to 2027 that the leaders must also agree in the coming weeks or months.

Austrian Chancellor Sebastian Kurz wants the recovery fund to be smaller, tweeting to say he “clearly rejects” the sum of €500 billion in grants.

“If the money is not used to invest in the future, if it does not go hand in hand with necessary reforms in states that are simply broken in their systems… then all this will fizzle out,” Kurz warned.

The summit could even stretch into Sunday, but few in Brussels were confident of a breakthrough, despite the tight timetable, so another summit may well follow later this month.

© – AFP 2020

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