EU may not reach agreement on economic recovery, says Merkel

EU may not reach agreement on economic recovery, says Merkel

Leaders gather in Brussels to decide on the post-pandemic aid fund and the European Union budget. Amid stalemates, the summit enters the third day. “There is a disposition, but also a lot of different opinion.”

© picture-alliance/dpa/AP/Reuters Pool/F. Lenoir
This is the first face-to-face meeting between European leaders since the start of the pandemic

Federal Chancellor of Germany Angela Merkel warned on Sunday (19/07) that European Union (EU) leaders may not agree on the controversial post-pandemic multi-billion dollar recovery plan and long-term budget for the block economy.

“I still can’t say whether we will find a solution,” said Merkel, after the summit has once again been postponed and entered its third day this Sunday. “There is a lot of willingness, but there are many different positions. It is possible that there is no result today.”

In Brussels, heads of government and state of 27 member countries officially deliberate both on the € 750 billion after the coronavirus crisis fund and on the EU budget until 2027, totaling 1, 1 trillion euros. This is the first meeting of European leaders face to face since the beginning of the pandemic in March.

After two days of negotiations without consensus, there are still impasses among government officials as to what conditions should be attributed to the payment of subsidies from the recovery fund, designed to help European countries to repair the damage caused by the covid-19 crisis.

More optimistic than Merkel, France’s president Emmanuel Macron said he believed in the possibility of a solution. “These are the main issues that we have before us and for which we must find the right commitments in the coming hours. I think it is still possible, but there is a risk,” he said on Sunday.

The Prime Minister of Greece, Kyriákos Mitsotákis, said he hoped that the leaders will be able to overcome the differences on Sunday and agree to an economic stimulus to boost the bloc’s growth after the pandemic. “We are facing an unprecedented economic crisis and we simply cannot afford to appear divided or weak.”

On Saturday night, an EU official reported – on condition of anonymity, as negotiations are ongoing – that the European Council President, Charles Michel, host of the meeting, was “tying up some loose ends” throughout the night. in order to find a solution and have a new proposal to present to European leaders this Sunday.

European Council spokesman Barend Leyts said, also on Saturday night, that the summit in the Belgian capital would resume at 12 noon (local time, 7 am in Brasilia) this Sunday.

Michel, Merkel, Macron and the President of the European Commission, Ursula von der Leyen, in Brussels

© Reuters/F. Francois Walschaerts
Michel, Merkel, Macron and the President of the European Commission, Ursula von der Leyen, in Brussels

The biggest point of contention lies in the size of the recovery package, while the Netherlands, Austria, Denmark, Sweden and Finland defend smaller fund and subsidy portions. They demand that any loans or grants be paid only under strict conditions, the fulfillment of which must be “absolutely guaranteed”, for example, through unanimous resolutions.

Probable recipients, such as Italy, Spain and Greece, reject this view. For Italian Prime Minister Giuseppe Conte, the Dutch demand for a veto on payments is not acceptable.

Germany and France are also pushing for an ambitious package of loans and grants to member states and have repeatedly asked for a commitment from other countries.

Tensions rose on Saturday night when Merkel and Macron got up and left a meeting. The Franco-German alliance is seen as vital to any major deal within the 27-country bloc.

Asked about the incident, Dutch Prime Minister Mark Rutte said: “They have fled in a bad mood. We will continue tomorrow.” But he remained hopeful: “The fact that we continue to negotiate shows that we are all optimistic. But if we are going to succeed, we need to wait and see.”

Austrian Federal Chancellor Sebastian Kurz added: “As expected, it is clear that it is a difficult dispute, a difficult negotiation, but we are moving in the right direction, and that is the most important thing.”

On Saturday, a revised plan had been presented to leaders to try to break the deadlock on the first day of the meeting. The proposal envisaged, for example, a reduction in the share of subsidies granted to EU countries, as well as an “emergency brake” on disbursement of funds. But it was also not enough to reach consensus among government officials.

There is much at stake in the first face-to-face summit among European leaders since the pandemic was declared. The bloc is facing the worst recession of all time, and countries need money quickly to sustain their economies shaken by the coronavirus crisis. It is estimated that the bloc’s economy will contract by 8.3% this year, according to the latest forecasts.

High hopes lie with Merkel, as the longest serving head of government and who is already participating in negotiations on the EU budget for the third time. She also currently holds the rotating presidency of the European Council.

EK / afp / ap / dpa / rtr


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