EU leaders deadlocked over COVID recovery plan after a day of haggling
Updated 13:22, 18-Jul-2020

European Union leaders' views on a mass stimulus plan remained "diametrically different," Czech Prime Minister Andrej Babis said on Friday, after hours of talks on how to breathe life into economies ravaged by the coronavirus pandemic.

"The opinions on the size of the recovery fund are diametrically different," Babis told reporters as the leaders took a break in their all-day talks. "We will see if we even get to some agreement today, I rather think that we will not."

"So far, I don't have the feeling we are getting closer to an agreement, I rather have the opposite feeling."

'Diametrically different'

Suffering through the worst recession in its history, the 27 EU nations are struggling to close ranks on the bloc's 2021-27 budget, proposed at above one trillion euros, and a linked new recovery fund worth 750 billion euros, meant to help rebuild southern economies most affected by the pandemic.

Despite displays of bonhomie at the start of their first face-to-face talks in five months in Brussels, the 27 remained at odds over the overall size of the package, the special recovery fund and its split between free grants and repayable loans, budget rebates for five rich net payers, vetting procedures to access aid and rule of law strings attached to it.

The first meeting ended up fruitlessly after 12-hour haggling as Dutch Prime Minister Mark Rutte refused to give ground on his demand for strict controls on payments to his struggling southern partners.

Rutte, led the wealthy camp of northern states including Denmark, Austria, Finland and Sweden, facing off against Germany, France, the ailing southerners Italy and Spain, as well as Poland and eastern peers.

"If they want loans and even grants then I think it's only logical that I can explain to people in the Netherlands...that in return those reforms have taken place," Rutte said, in estimating chances for a deal at a modest fifty-fifty.

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EU leaders hold first budget summit during the pandemic

German Chancellor Angela Merkel arrives for an EU summit at the European Council building in Brussels, July 17, 2020. /AP

German Chancellor Angela Merkel arrives for an EU summit at the European Council building in Brussels, July 17, 2020. /AP

'Moment of truth'

German Chancellor Angela Merkel, who celebrated her 66th birthday on Friday in Brussels, was also cautious on chances for an agreement, envisaging "very, very difficult negotiations."

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, Merkel warned that the differences among the leaders were "very very large," while Macron described it as a "moment of truth."

The 27 leaders are scheduled to reconvene at 9:00 a.m. GMT on Saturday but diplomats are increasingly gloomy about the prospect of a deal being struck this weekend.

If no breakthrough made in the summit, another summit may well follow later this month despite the tight timetable.

(With input from Reuters, AFP)

(Cover: European Union leaders during a round table meeting at an EU summit in Brussels, July 17, 2020. /AP)