EU Leaders Are Struggling to Reach Agreement Over Recovery Fund

The European Commission stated earlier this month that the bloc may suffer a massive recession following the pandemic, as Germany, France, and other major EU members are expecting declines in their GDP.

EU countries are far from reaching common ground on a recovery fund during the bloc's summit in Brussels, according to preliminary reports.

Commenting on Friday's negotiations, Polish Prime Minister Mateusz Morawiecki noted that "there may not be a deal tomorrow or the day after". In the meantime, Dutch Prime Minister Mark Rutte has demanded that any one country should have the option to block payouts if the recipient state is not fulfilling its progress on promised economic reforms.

Germany's Chancellor Angela Merkel, French President Emmanuel Macron and European Council President Charles Michel talk at the start of the first face-to-face EU summit since the coronavirus disease (COVID-19) outbreak, in Brussels, Belgium17 July 2020.

© REUTERS / Stephanie Lecocq

At the same time, Italy and Spain, hit hard by the virus, stressed that the aid should be provided as grants, not loans, as economies should be able to recover without taking on ever-greater burdens of debt. According to Rome, Italy is facing the worst crisis since WWII, with the country's public debt reaching 2.5 trillion euros.

Meanwhile, the Hungarian Parliament has threatened to block the whole budget plan, demanding an end to the so-called Article 7 sanctions probe against the country. Budapest is also demanding that "political parties and political organisations disguised as civilians" should not be eligible for EU funding.

In addition to a 750-billion euro pandemic fund, the bloc is currently trying to adopt a budget plan of more than 1 trillion euros for 2021-2027.