EU talks to rescue €750bn recovery package stall amid heated debate

By Daniel Boffey in Brussels

European Union leaders agreed to reconvene at noon on Sunday after spending Saturday evening locked in intense negotiations in an attempt to save a summit on the terms of a €750bn (£682bn) pandemic recovery fund from an acrimonious end as the debate over the bloc’s financial future became “heated”.

A second day of talks in Brussels saw Poland’s prime minister, Mateusz Morawiecki, publicly accuse the Netherlands, Austria, Denmark and Sweden of being “misers” while the Italian prime minister, Giuseppe Conte, claimed the Dutch were trying to rewrite the EU’s rules.

“We are stalled, it is proving very complicated, more complicated than expected, there are many discussions on what we are discussing that we are unable to resolve,” Conte said in a video message on his Facebook page on Saturday evening.

The leaders are split over both the size of a recovery fund and the seven-year budget due to start next year. There is also stark division over the nature of the conditions attached to the emergency funding and the balance between grants and loans on offer to countries hit by the crisis.

Latvia’s prime minister, Krišjānis Kariņš, tweeted: “Today there is a heated debate about the multi-annual budget and the reconstruction fund in order to reach an agreement.”

Charles Michel, the president of the European council, tabled a new set of proposals on Saturday morning in an attempt to reboot negotiations following a stormy 13 hours of talks on Friday.

Under Michel’s proposal for the recovery fund, the level of grants would be reduced from the €500bn initially proposed by €50bn. But the northern member states are seeking to cut that further.

A member state would also be allowed to hold up the disbursement of cash by making a “request within three days … to bring the matter without delay, to the European council or [finance ministers] to satisfactorily address the matter”.

The Netherlands, among others, wants tough conditions on the distribution of funds, especially in the context of the Polish and Hungarian governments, which have faced accusations of failing to respect the rule of law.

The Dutch prime minister, Mark Rutte, has insisted he cannot be expected to take on extra national debt in order for the EU to make cash payments to member states without his parliament having a say. Boyko Borissov, the Bulgarian prime minister, had accused his fellow leader on the first day of talks of wanting to be “the police of Europe”.

On Saturday, Zoltan Kovacs, the Hungarian government’s spokesman, tweeted: “While negotiations on the conditions of the EU recovery fund are now closer to a compromise, PM [Viktor] Orbán is holding the position that only Hungarians should get to decide how to spend the money that belongs to [Hungary]. No political pre-conditions can be accepted.”

Michel’s latest gambit was welcomed by a senior Dutch diplomat. “In the end this is a package and there are many more issues to solve. But the proposals on governance as put forward by Michel are a serious step in the right direction. Many issues remain and whether we get there will depend on the next 24 hours.”

On the long-term budget, Michel is also offering an increase of €50m to the annual Austrian rebate and an extra €25m per year for Denmark and Sweden.

Morawiecki gave his reading of the situation in a tweet: “There is a group of countries that we call a group of misers, and they call themselves frugal, who want a smaller contribution to the budget, which we call the budget for rebuilding Europe.”

The proposed change in the proportion of grants and loans in the recovery fund is facing opposition from Italy.

“We are negotiating hard with the Netherlands but also with other so-called frugal countries that do not share the need for such a substantial response, especially with regard to subsidies, but they also question loans,” the country’s prime minister said.

The summit is being extended for another day, with a source close to its chairman, Charles Michel, saying the leaders would be handed new proposals before they reconvene at noon on Sunday.

If the EU leaders fail to find a compromise this weekend, a second summer summit in the last week of July could be on the cards.