European Union leaders hope to unite behind an unprecedented stimulus to inject billions of euros into their coronavirus-ravaged economies at a virtual meeting this morning – but many fights still separate them from a final deal.
The 27 national heads join a video conference to discuss recovery for the bloc that has lost over 100,000 lives to COVID-19 and faces an unprecedented economic downturn threatening its stability and global standing.
“It’s a crisis without precedent that has had an enormous impact – economic, social and also on the viability of the EU,” said a senior EU diplomat. “To show that Europe protects, we cannot take any longer on this, as delays will only make things more difficult and more expensive.”
Under discussion is the EU’s next joint budget worth more than 1 trillion euros ($1.1 trillion) for 2021-27, and an attached recovery fund that would be replenished by a proposed 750 billion euros worth of historic borrowing by the executive European Commission.
The aid would be disbursed mainly among worst-hit nations, like Italy and Spain, but many differences must still be settled before the necessary unanimous agreement is in sight.
“We want at least to agree some basic elements of proposal … Time is of the essence and a final deal needs to be done in July, before the summer break,” said another senior EU diplomat.
NEEDY SOUTH, FRUGAL NORTH
While the ailing south is calling for cash as soon as possible in the form of free grants and without demands of macroeconomic reforms, the more thrifty north only wants to allow conditional loans.
The east says too much money is being rerouted towards the south and want to maintain the earlier spending focus on agriculture and closing development gaps with the richer west.
The wealthy net payers, including Germany, want to retain budget rebates against the will of other EU states, and there is no agreement on how to eventually repay the Commission debt.
After the bloc’s initial response to the coronavirus exposed divisions over sharing of medical supplies and the issue of grants vs loans, EU leaders want a show of unity on Friday.
But they will need at least one or two more meetings in person next month to see if they can iron out the final deal, which would also mark a step towards more integration in the bloc after the damaging setback of Brexit.