Two days of intense negotiations were not enough for European leaders to reach an understanding to recover the economy from the effects of the covid-19 pandemic. The European Council will continue for another day in Brussels, with the heads of European Union governments meeting again this Sunday in the Belgian capital, starting at 12:00.
The European Council, which was to last two days, started on Friday morning and lasted until dinner this Saturday. Late night business marathons are a habit at these summits, but this time work was halted before the day ended and will resume this Sunday morning.
The announcement was made at 22:00 (Lisbon time) on twitter by Barend Leyts, spokesman for the President of the European Council, Charles Michel.
– Barend Leyts (@BarendLeyts) July 18, 2020
A sign that there is still no green light for an agreement, but that it will not be that far from being reached, because otherwise there would be no extra time in this European Council considered decisive for the future of Europe.
The extension of the European Council should serve for the Belgian Charles Michel to present his third proposal (“negotiating box”). The President of the European Council presented this morning in a new attempt to approach the claims of the so-called frugal countries, which want less money to distribute on a non-refundable basis.
The first reformulation of the proposal that European leaders had on the table on Friday was not enough, forcing the European Council to another day of negotiations.
The Prime Minister of Italy, Giuseppe Conte, had realized this afternoon that the negotiations reached a point of “stalemate”, revealing that the summit “is proving to be very complicated, more complicated than expected”, and regretting that the discussion is fragmented into too many points of contention, which makes an agreement difficult.
Second proposal cut 50 billion in subsidies
To bridge the frugais, Michel cut € 50 billion the total amount to be allocated to Member States via grants, reinforcing the amount to be distributed through loans. This new “nego box” presented this Saturday morning assumes that the European Commission will go to the markets to seek the same 750 billion euros that were included in the initial proposal made by the institution led by Ursula von der Leyen, but with a separate division: 450 thousand million euros in non-refundable funds and the remaining 300 billion via loans.
On the other hand, to compensate the countries of the south, those hardest hit by the crisis and those for whom the loan modality is less viable due to the respective high levels of public debt, Charles Michel raised the value of the recovery and resilience instrument (RFF, English) to allocate via grants from the initial 310 billion euros to 325 billion.
However, despite the fact that a Dutch diplomatic source referred to the Council leader’s new proposal as “a serious step in the right direction”, the frugal countries, informally led by the Netherlands, remain firm in their intention to reduce the amount to be attributed to non-refundable funds According to the Politico, the frugal companies want to establish a ceiling for grants under the Recovery Fund (Next Generation EU) of 150 billion euros.
Reasons for the impasse
The frugal, which António Costa, Portuguese prime minister has already classified as “forretas”, still intend to see reduced the total amount of the next multiannual financial framework (MFF, 2021-27) that Michel has already revised slightly to 1.074 billion euros. On these two points, Finland is aligned with the frugal countries, revealed the Austrian chancellor, Sebastian Kurz himself.
Giuseppe Conte added that the RFF’s governance model as well as the so-called rebate mechanism (in practice are discounts granted to net contributors to the Community budget) continues to hold an agreement, also here, to a large extent, a division between frugal and other countries.
The Transalpine Prime Minister, supported by capitals like Madrid, Lisbon or Paris, considers it unacceptable to guarantee the right of veto to the Council sought by the head of the Dutch government. Mark Rutte wants to have firm control over the fate that the Member States want to give to the Community funds arising from a joint debt issue, while the southern countries defend the Community method (qualified majority).
Charles Michel today proposed an alternative – “super emergency brake” – that would allow a country that opposes the disbursement of resources from the recovery fund to elicit an assessment by the Council or Ecofin.
The Belgian kept the rebates in his proposal only for Sweden, Denmark and Austria, dropping discounts for Germany and the Netherlands, an issue that raised the Hague’s objection.
Throughout the day European leaders unfolded in several meetings parallel to try to approximate positions. It is already taken for granted that, at dinner, Charles Michel will update his proposal with a new “black box”. It is uncertain whether it will be enough for government leaders and heads of state of the Union to leave Brussels with an agreement on the Recovery Fund and the next MFF.