Opposition from the Netherlands and the threat of a Hungarian veto weighed on chances of a deal on the eve of EU talks on a mass stimulus scheme to kickstart economies hammered by the coronavirus.
The 27 national EU heads will meet face-to-face in Brussels on Friday and Saturday for the first time since COVID-19 pushed the bloc into a sweeping lockdown, as well as its deepest-ever recession, forecast at 8.7% this year for euro zone members.
They will haggle over their 2021-27 budget proposed at just above 1 trillion euros and a linked recovery fund of 750 billion euros in grants and loans designed to help rebuild southern states like Italy where the virus took the biggest toll.
“Does 1,750 billion euros seem like a lot of money to you? Believe me, it does to the European heads… But it is worth it,” the chairman of the meeting, Charles Michel, said on Thursday in stressing the EU’s economic answer to the pandemic would top that of the United States or China.
But a senior EU official involved in preparations of the talks stressed that “serious differences” persisted and a deal was not a given.
“We are not there yet,” said the official, naming the overall size of the package, the proportion between grants and loans, governance of the recovery scheme, rule of law conditions on money and climate goals as still dividing opinion.
While the southern, high-debt countries call for solidarity, the Netherlands leads the camp of wealthy but thrifty net contributors to the bloc’s joint coffers weary of bankrolling peers they see as fiscally reckless.
Together with Austria, Denmark, Sweden and Finland, Dutch Prime Minister Mark Rutte wants to curb the funding, favours loans over grants, demands economic reforms as conditions to access the money and wants to keep his EU budget rebate.
Rutte also wants more powers for the Dutch parliament in deciding to allow the bloc’s executive European Commission to borrow on the market to finance the 750 billion euro fund, and unanimous voting by EU states to accept applications for aid.
“Let’s try to solve it, and not talk about 26 to 1,” said a senior EU diplomat.