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EU leaders seal deal on spending and €750bn Covid-19 recovery plans | World news

EU leaders have reached a historic agreement on a €750bn pandemic recovery fund and their long-term spending plans following days of acrimonious debate at what was the bloc’s longest summit in two decades. As the meeting reached its fifth day, the 27 exhausted heads of state and government finally gave their seal of approval to

EU leaders have reached a historic agreement on a €750bn pandemic recovery fund and their long-term spending plans following days of acrimonious debate at what was the bloc’s longest summit in two decades.

As the meeting reached its fifth day, the 27 exhausted heads of state and government finally gave their seal of approval to the EU jointly issuing debt to be disbursed through grants on an unprecedented scale in the face of an economic downturn not seen since the Great Depression.

The end of the tortuous process was announced by the European council president, Charles Michel, who had been chairing the leaders’ long debates, with a single word on Twitter: “Deal!”

In a press conference held soon after, Michel, a former Belgian prime minister, said the “marathon” had ended in success and showed that the deal would be seen as a “pivotal moment in Europe’s journey”. “The magic of the European project continues to work”, he said.

Charles Michel


July 21, 2020

The euro rose against the dollar on the news to stand at $1.145. France’s president, Emmanuel Macron, described it as a “historic day for Europe”.

Ursula von der Leyen, the European commission president, said that the more than 90 hours of negotiations had been “worth it” and that the EU could not be accused this time of doing “too little, too late”.

“Europe still has the courage and imagination to think big,” she said. “Europe as a whole now has a big chance to come out stronger from the crisis”.

The deal was hard won and the negotiations divided north against south, and east against west, as governments haggled over the terms of both the bloc’s seven-year budget and an one-off economic stimulus.

The summit, stretching from Friday morning into the early hours of Tuesday, was so prolonged that two leaders, Xavier Bettel of Luxembourg and Ireland’s Micheál Martin, had to briefly return home before coming back to Brussels.

But despite initial opposition from the so-called frugal states of the Netherlands, Austria, Sweden and Denmark, agreement was finally found, following a final 5.15am session of the 27 on Tuesday morning, to disburse vast sums in the form of non-repayable grants to countries most stricken by the coronavirus pandemic.

The breakthrough followed a new proposal from Michel, for the EU to pay out €390bn in grants countries and €360bn in loans from the new economic reconstruction fund.

The “frugal” states had been pushing for the original proposal by the European commission for €500bn in grants to be reduced to €350bn, to the evident frustration of Macron and the German chancellor, Angela Merkel.

Italy’s prime minister, Giuseppe Conte, had at one stage warned his Dutch counterpart Mark Rutte, who led the way on reducing the level of grants, that he might become a hero at home but that he faced being blamed by the rest of Europe for his lack of solidarity.

But Michel’s new formulation, emerging out of hours of bilateral talks with the leaders on both sides of the debate outside of the full plenary sessions of the leaders, finally received the unanimous support it required.

A new “spirit of compromise” had been found, Macron had said earlier on Monday, despite the French president thumping the negotiating table at the Brussels event in frustration the previous evening and likening those thwarting his spending plans to the ill-fated British in previous budget negotiations.

The final outcome is a messy bundle of compromises. As part of the deal, the “frugals” will receive significant increases in the rebates they receive on their budget contributions, a throwback from 1984 when Margaret Thatcher secured discounts on the UK’s out-sized budget contributions.

Michel also watered down his initial proposal for holding up the disbursement of funds both where there are concerns over either a lack of promised economic reform or the state of the rule of law in a country.

Where there are fears that reforms are not being implemented by member states in receipt of money, any one EU leader can halt the disbursement of money to allow the European council of the 27 heads of state and government to “exhaustively” debate the situation.

On the rule of law, France, Germany and other countries had wanted a link to EU funds but Hungary and Poland’s governments, who have been previously accused of undermining judicial independence and minority rights, rejected this plan.

The compromise agreed by the leaders instead puts off designing a rule of law mechanism for another day with agreement to be made by a qualified majority of member states.

The final deal on Monday also swung in Poland’s favour by watering down a demand to link green transition funds to signing up to the 2050 climate target to the consternation of activist groups and senior MEPs.

Poland, which stands to gain €37bn in grants from the fund, plus potentially billions more from a “just transition fund” to move away from coal, is the only EU member state not to have made the 2050 pledge.

Beyond a debate about the size of the recovery fund for countries hit hardest by the coronavirus pandemic, leaders had to haggle over the EU’s seven-year budget,the multi-financial framework, which is due to start next year.

Michel secured agreement on €1.074tn on EU programmes over the next seven years although the leaders will face severe opposition in the European parliament when it is brought to the chamber for MEPs’ agreement. Von der Leyen said the cuts made by leaders to the commission’s original larger proposal were “regrettable”. Merkel told reporters that she hoped MEPs would note how the leaders had “wrestled” to find a solution.

The Brussels summit, the first in-person meeting of the leaders for five months, was just a few minutes shorter than the record-holding meeting in Nice 20 years ago when leaders debated EU enlargement.

It had been notably bad-tempered from day one. Merkel and Macron abruptly walking out on talks with the Dutch prime minister as frustrations bubbled over over the weekend. As tempers flared on Sunday night, Macron had accused Austria’s chancellor, Sebastian Kurz, of having a “bad attitude” and not caring about the views of others after he had left the negotiating room to take a call.

Asked to respond to Macron’s criticisms of his approach, Kurz said: “It’s understandable that some people, when they don’t get much sleep, have their nerves on edge, and we respect that, but all’s well that ends well.”


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Susan E. Lopez

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