European Union leaders failed to reach an agreement on Saturday to create a massive stimulus fund that revives their battered economies by the coronavirus pandemic, after two days of tense negotiations, but extended their summit for another day to try to resolve their differences.
When the 27 leaders returned to their hotels after a dinner at the conference room in Brussels, a source close to the summit president, European Council chief Charles Michel, said they would receive new proposals before they meet again on Sunday at 1000 GMT.
Amid a pandemic that is causing its worst economic crisis since World War II in many European economies, the leaders met on Friday to discuss a proposed recovery fund of 750 billion euros ($856 billion) and an EU budget for 2021-27 of more than 1 trillion euros.
However, a group of prosperous, fiscally “frugal” northern states led by the Netherlands blocked progress on the first head-to-head summit since the confinements that began in the spring across the continent.
These countries are in favour of repayable loans rather than free subsidies for the indebted and hit economies of the Mediterranean arc, while wanting control over how the funds are spent.
Hopes for an agreement grew earlier when Michel proposed to review the entire package that was designed to alleviate Dutch concerns. Under its new plan, the portion of the grants in the recovery plan would be reduced to 450 billion euros from 500 billion euros and a new “emergency brake” would be added to the disbursement.
However, hopes that this would be enough to reach a pact faded quickly, and even before the leaders went to dinner, Italian Prime Minister Giuseppe Conte made it clear that the possibilities were bleak.
“We are in an impass now. It’s more complex than expected,” Conte said in a video posted on Facebook. “There are many unresolved issues yet.”
The commissioner in charge of the budget in the executive arm of the bloc reminded the leaders – who wore masks and kept the distance from each other – that COVID-19 is still with each other and action is needed.
“Just a solemn memory: coronacrisis is not over: infections are rising in many countries,” Johannes Hahn tweeted. “It is time to reach an agreement that allows us to provide the support urgently needed for our citizens+economies!”
One diplomat indicated that the “frugals” were pushing for further cuts to the fund and higher repayments to net payers in the EU’s central budget, among other demands.
The exact size of the EU’s long-term budget and the extent to which to use payments as leverage for reforms, or whether to withhold money from countries that do not meet democratic standards, were not resolved when leaders withdrew on Saturday.
