EU Summit Drags Into 3rd Day Amid Splits on Virus Fund

BRUSSELS (AP) -- Acrimonious European Union talks over an unprecedented 1.85 trillion-euro ($2.1 trillion) EU budget and coronavirus recovery fund entered a third day Sunday with German Chancellor Angela Merkel warning that the summit of 27 leaders could still end without a deal.

The marathon negotiations, which are taking place amid the unprecedented crisis of the coronavirus pandemic, have underscored the deep fissures within the 27-nation bloc with the traditional Franco-German alliance struggling to get its way.

“Whether there will be a solution, I still can't say,” Merkel said as she arrived early for the extra day of talks at what had been planned as a two-day summit in Brussels. ”There is a lot of good will, but there are also a lot of positions. So I will join in working for it. But there may also be no result today.”

The differences were so great that Sunday's resumption of talks by the leaders was pushed back several hours as small groups worked on new compromise proposals.

The coronavirus pandemic has pitched the bloc into its worst recession ever and killed around 135,000 of its citizens. The EU executive has proposed a 750 billion-euro coronavirus fund, partly based on common borrowing, to be sent as loans and grants to the most needy countries. That comes on top of the seven-year 1 trillion-euro EU budget that leaders have been haggling over for months even before the pandemic hit.

All nations agree they need to help but richer nations in the north, led by the Netherlands, want strict controls on spending, while struggling southern nations like Spain and Italy say those conditions should be kept to a minimum.

Merkel and French President Emmanuel Macron walked out of heated talks late Saturday with a group of nations nicknamed “the frugals.”

“They ran off in a bad mood,” Dutch Prime Minister Mark Rutte said early Sunday after Merkel and Macron's departure.

The frugal nations held talks with EU summit host Charles Michel early Sunday but the chances of quick progress appeared remote. Merkel and Macron refused to water down their proposals of aid while Rutte and others also stuck to their demands.

“It is a decisive moment," said an EU official, who asked not to be identified because the negotiations were ongoing.

Rutte is widely seen as the leader of the frugal nations. He has long been known as a European bridge builder, but this weekend his tough negotiating stance is being blamed for holding up a deal.

While Italian Prime Minister Giuseppe Conte says he has a good personal relationship with Rutte, he said the “clash is very hard” and that Rutte's demand for a veto ”is an unwarranted request.”

Rutte and his allies are pushing for labor market and pension reforms to be linked to EU handouts and a “brake" enabling EU nations to monitor and, if necessary, halt projects that are funded by the recovery fund.

“He can't ask us to do specific reforms,” Conte said. "Once (the aid) is approved, each country will present its proposals.”

Another member of the frugals, Austrian Chancellor Sebastian Kurz, said he still believed a deal was possible, but there is a “long way to go,” the Austria Press Agency cited Kurz as saying. “I personally would think it a great shame if it were broken off,” he said.

Rutte also wants a link to be made between the handout of EU funds and the rule of law — a connection that is clearly aimed at Poland and Hungary, countries with right-wing populist governments that many in the EU think are sliding away from democratic rule.

“I don't know what is the personal reason for the Dutch prime minister to hate me or Hungary, but he's attacking so harshly and making very clear that because Hungary, in his opinion, does not respect the rule of law, (it) must be punished financially,” Hungarian Prime Minister Viktor Orban said.

Orban said he was prepared to stick around for a week if necessary.

"Not even soccer is as important as reaching an agreement. It's not about Hungary but about Europe now,” said the notoriously soccer-mad prime minister.

Macron said leaders need to compromise on Sunday but respect the underlying goals of the EU.

“I think it is still possible, but these compromises, I say very clearly, will not be made at the cost of European ambition,” he said.