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Marathon EU talks turn into a power struggle for future control of the agenda

John Downing


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Hard talking: Dutch PM Mark Rutte and Luxembourg’s PM Xavier Bettel (right) speak at the summit. Photo: Francois Lenoir/Reuters/Pool

Hard talking: Dutch PM Mark Rutte and Luxembourg’s PM Xavier Bettel (right) speak at the summit. Photo: Francois Lenoir/Reuters/Pool

REUTERS

Hard talking: Dutch PM Mark Rutte and Luxembourg’s PM Xavier Bettel (right) speak at the summit. Photo: Francois Lenoir/Reuters/Pool

There is an old Brussels postcard dating from the 1970s which frames the best identikit European man by rehashing every possible national stereotype. Ideally, he - and this is a male stereotype - would be... sober as an Irishman, humble as a Frenchman, as humorous as a German, as organised as an Italian, as generous as a Dutchman and have the cooking skills of a Brit.

Most European jokes depend on these stereotypes which are sometimes funny and sometimes tiresome, depending on your point of view - and your nationality. But over the past three days at a leaders' summit these stereotypes and the tired old jokes were very much on display.

This one pitted the "frugal north" against the "spendthrift south". And attempts at humour were not advised.

The reality is that coronavirus has killed 135,000 people in the European Union and it has plunged the 27 member states into their worst recession in the bloc's 63-year existence. The heads of government spent three days trying to agree a €750bn rescue plan and struggled to compromise.

The leaders have also failed again to agree a €1tn budget plan for the next seven years, 2021 to 2027. This further increases the risk to vital EU programmes which require detailed spending plans and regulations to be framed in an infeasible short time span. The budget row has dragged on for several months and at the last summit on February 21, before the coronavirus crisis erupted, talks broke up.

These marathon negotiations have underscored the deep fissures within the 27-nation bloc with the traditional Franco-German alliance struggling to get its way. German Chancellor Angela Merkel and French President Emmanuel Macron had basically laid the groundwork for what became the EU's proposals for a coronavirus rescue plan with €500bn in non-repayable grants and €250bn in low-interest loans.

Some Brussels diplomats saw the encounter as something of a power face-off between the member states. It could spell the end of the Franco-German axis as a major EU driver.

The so-called "frugal four",  the Netherlands, Denmark, Sweden and Austria, more recently joined by Finland to make five, prefer to style themselves as the "five funders" who contribute much to EU coffers. Their fight has focused on two main points: putting a ceiling on the funds, and putting more focus on loans than on grants, with strict terms and conditions attached to money given out.

The "frugals" fear Italy and Spain especially and want them to reform their pensions and welfare regimes. They argue these economies had big problems even before coronavirus.

The EU Commission's original €750bn coronavirus fund is to be partly based on common borrowing, for these as loans and grants to the most needy countries. The idea of the EU borrowing large sums is a taboo subject for the frugal nations - but they have grudgingly conceded it as a one-off coronavirus response.

Unsurprisingly, Spain and Italy say those conditions should be kept to a minimum. Taoiseach Micheál Martin, attending his first EU summit, showed a great deal of sympathy with Rome and Madrid. 

He also criticised moves by the frugals to "dilute" the original Franco-German proposals, arguing that a big spend - based on grants and not increasing national debts - was required. Merkel and Macron had walked out of heated talks on the second day, late on Saturday, with "the frugals". 

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

The EU summit chairman, Charles Michel, is no stranger to marathon and intractable talks as a former prime minister of Belgium where government formation drags on and on. He kept going to talks with the various leaders individually and in groups. At one stage he met with Mr Martin along with the current Belgian prime minister and the leader from Luxembourg.  

Merkel and Macron refused to water down their proposals of aid while Rutte and others also stuck to their demands. 

Rutte is widely seen as the leader of the frugal nations. Prior to this he had been known as an EU compromise-maker, but his tough stance on this was cited as a major impediment to a deal.

Italian Prime Minister Giuseppe Conte tried to avoid personalising things to Rutte. But he said Rutte's demand for a veto on funding to countries not following an economic reform programme was "an unwarranted request". 

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

Austrian Chancellor Sebastian Kurz, another "frugal", said he believed a compromise formula could be found. "I personally would think it a great shame if it were broken off," he told the Austrian press agency.

Many of the leaders - including Rutte - also wanted a link between the EU funding and the so-called rule of law.

That is clearly aimed at Poland and Hungary, which have right-wing populist governments believed by some in the EU to undermine democracy and human rights.

This enraged the Hungarian Prime Minister, Viktor Orban. "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," Mr Orban said.

Mr Orban said he was prepared to continue talks for the rest of the week.

President Macron said leaders need to compromise while also respecting 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.

Irish Independent