European Union leaders failed to unlock an agreement on a 750 billion-euro ($860 billion) response to the coronavirus pandemic after a second day of sparring in Brussels and will come back to try again on Sunday.
Leaders continued with informal talks after negotiations broke up at at 11 p.m. on Saturday as they tried to find common ground on the composition of the fund and the conditions attached to it. A crucial late-night meeting including Dutch Prime Minister Mark Rutte, Germany’s Angela Merkel and Emmanuel Macron of France ended abruptly in a dispute over how much of the package should be disbursed as grants and how much as loans.
Germany and France are insisting that at least 400 billion euros should be handouts and Rutte and four other fiscal hawks from northern Europe are pushing for a much lower figure, a French diplomat said. After several attempts at finding a compromise, Merkel and Macron left the meeting and returned to their hotel together for further discussions, the diplomat said.
“They are walking away grumpy,” Rutte told reporters afterward. “A compromise is possible tomorrow but there remain big issues.”
With investors already pricing in a deal after a series of bold announcement in recent weeks, leaders are under intense pressure to bridge their differences before financial markets open on Monday.
Yet the battle has exposed the fault lines at the heart of the EU. Fiscally hawkish countries from northern Europe are showing their resentment at paying for the pandemic while the southern countries worst affected are struggling to contain their outrage at the lack of solidarity.
“We will keep going because we have to resolve it,” Italian Prime Minister Giuseppe Conte told reporters. “Delaying this does no good to anyone.”
Rutte and his allies from Austria, Denmark, Sweden and Finland are trying to water down the handouts that the highly indebted South sees as critical for shoring up its finances. While Saturday proved less bad-tempered and more constructive than Friday’s gathering, it was still difficult to discern much progress. Conte called it a “deadlock” while a German diplomat said the talks had reached a critical phase.