Angela Merkel and Emmanuel Macron said they are willing to walk away from a summit of EU leaders, as they arrived at the third day of a long and acrimonious debate on the terms of a €750bn (£682bn) pandemic recovery fund.
With the EU split between northern and southern member states as well as eastern and western, France’s president and the German chancellor both indicated their patience was waning despite the need to respond to the economic recession facing the bloc.
“We are going into the third day of negotiations today and it is certainly the decisive one,” Merkel said. “At this point, we’ve properly worked through various issues including the size of the fund, how it is managed and also issues regarding the rule of law. I still can’t tell if there will be a solution.
“There’s lots of goodwill, but there are also many positions,” she added. “That’s why I will be among those pushing for an agreement, but it is also possible that there will be no result today.”
Arriving at the reconvened summit on Sunday, Macron told reporters: “I believe it is still possible. But these compromises, and I say it very clearly, will not be done at the expense of European ambition.”
The leaders are split over the size both 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.
Saturday’s discussions dragged late into the night. Poland’s prime minister, Mateusz Morawiecki, publicly accused 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 with their insistence on a veto on the disbursement of emergency funds.
Macron and Merkel had also abruptly walked away from negotiations with the Dutch prime minister, Mark Rutte, at one stage during the evening, such was their frustration at attempts by the northern member states to reduce the size of the recovery fund.
“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 had said in a video message on his Facebook page.
Rutte suggested there was still hope of a breakthrough, however. “I think it is possible,” he said. “But there are really big issues. So many things have yet to be arranged.”
The summit had been markedly bad-tempered on Friday, its first day, and its chairman, Charles Michel, the president of the European council, was forced to table a new set of proposals on Saturday morning in an attempt to reboot negotiations.
Under Michel’s proposal for the recovery fund, the level of grants would be reduced from the €500bn initially proposed to €450bn. But the northern member states are seeking to cut that further, to Germany and France’s irritation.
A member state would also be allowed to hold up the disbursement of the funds 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.
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, accused his fellow leader on Friday of wanting to be “the police of Europe”.
On Saturday, Zoltán Kovács, 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 had been 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 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.