Leaders haggle over budget, terms of key virus rescue package

BRUSSELS — European Union leaders on Saturday extended their summit by an extra day, convinced they are finally closing in on a deal for an unprecedented 1.85 trillion euro ($2.1 trillion) EU budget and coronavirus recovery fund, an EU official said.

Heading into a balmy summer night, a deal was still far off, but several key nations said negotiations were at least progressing despite tensions that were running high after months of battling the pandemic.

Two full days and one night of discussions by the bloc’s 27 leaders oscillated between irritation over how the huge sums should be spent and what strings should be attached to hope that somehow a deal could materialize — if not this weekend, then at least within a few weeks.

“Things are moving in the right direction,” said Austrian Chancellor Sebastian Kurz. “It it is of course, as you would expect, a tough struggle, a tough negotiation.”

An EU official, who asked to remain anonymous, said summit host EU official Charles Michel was “tying up some ends now” during a dinner with EU leaders before breaking for the night and reconvening with a new proposal early Sunday.

“We are pushing through. Michel is working carefully and doesn’t want to let it slip away now,” the official said.

The summit was supposed to end Saturday but more negotiations lay ahead for leaders as they deal with their toughest crisis in years, one that has burdened the bloc with its worst recession ever. The pandemic has sent the EU into a

tailspin, with 27nation bloc’s economy estimated to contract 8.3% this year.

Michel held talks with Geman Chancellor Angela Merkel, French President Emmanuel Macron and the main leaders involved in the dispute before joining other EU leaders for dinner.

The EU executive has proposed a 750billion euro fund, partly based on common borrowing, to be sent as loans and grants to the most needy countries. That comes on top of the sevenyear 1trillioneuro EU budget that leaders were fighting over even before COVID19 slammed their continent.

Despite the urgency and seriousness of the crisis, there were deep rifts between some richer nations in the north, led by the Netherlands, which want strict controls on spending, and struggling southern nations like Spain and Italy, which have been especially hit hard by the pandemic and are looking for as much help as they can get.

Michel’s latest proposals reduce the proportion of grants in the rescue package and raise the proportion of loans that will need to be paid back, in an apparent enticement for a group of “frugal” nations led by the Netherlands, said an EU diplomat, who requested anonymity.

But the issue of how to track the rescue money remains the key sticking point, the diplomat said. Michel has proposed a measure that would stop short of allowing any country a veto on how governments spend the money.