EU deal on €750bn Covid bailout 'unlikely' as talks enter third day

Angela Merkel and Emmanuel Macron are trying to save an EU-wide recovery deal, 18 July 2020 in Brussels. AFP/François Lenoir

As EU leaders enter a crucial third day of Covid-19 recovery talks, Germany's Chancellor Angela Merkel has warned that there may be no agreement on a huge 750 billion euro bailout plan for the shattered European economy.

Arriving for the third and what she said was probably the "decisive" day of an extraordinary European summit, Merkel said the 27 leaders had "many positions" on the size of the fund, on rules for accessing it and on tying it to respect for the rule of law.

"I still can't say whether a solution will be found," she said. "There is a lot of good will...but it may also be that no result will be achieved today."

French president Emmanuel Macron rallied behind her. “We are ready to compromise while not renouncing our ambition,” he tweeted. “Everyone must take responsibility. Let's continue moving ahead together.”

Nous sommes prêts au compromis sans renoncer à l’ambition. Chacun doit prendre ses responsabilités. Continuons d’avancer ensemble. https://t.co/zdcPkH0vSh

— Emmanuel Macron (@EmmanuelMacron) July 19, 2020

Merkel was due to join Macron and the president of the European Council Charles Michel, to prepare a new offer to break the logjam after Dutch Prime Minister Mark Rutte and his "Frugal Four" allies (Austria, Denmark, Sweden) blocked a deal.

Michel had proposed a 750 billion euro package of EU loans and grants to help member states recover from the historic coronavirus recession.

But Austria sees the package as too big and the Netherlands wants member states to be able to veto national spending plans.

Hungary’s premier Viktor Orban has also emerged as a roadblock to a deal after he threatened to veto a compromise tying aid distribution to respect for the rule of law.

He argued that any sanctions to suspend cash payments required the unanimous support of all governments, giving one country the power to veto.

Its position has been backed by Poland and Slovenia.

(with newswires)