Warming Summit in Brussels to negotiate the Recovery Fund and 7 years of Budget

The heads of state and government of the 27 analyze this Friday, for the first time, the proposal for a European Recovery Fund and the new draft for the EU Multiannual Financial Framework for the period 2021-2027. They are two of the most complicated negotiations that one can imagine in Brussels, which fully affect the political and economic interests, the worldviews, the philosophical aspirations and the electoral aspirations of each and every government. They affect more than 400 million people , hundreds of thousands of companies, countless unemployed. And that they involve astronomical amounts of money. More than a trillion euros for the Budget of the next seven courses and up to an additional 750,000 million in loans and direct transfers to try to reactivate a continent wounded by the pandemic.

The bad news is that this Friday there will be no agreement. The good news: that nobody expects it. "When you call two meetings it is because you know that you are not going to solve everything in one," a senior community official joked on Thursday about the expectations of this meeting. There is a formal, a political and a theatrical part. The positions are still very much at odds, and understanding is far away, but it is good that the top leaders see each other's faces, even if by teleconference, tell each other some truths and set positions. Political drive for a political problem that technicians cannot solve.

The Summit really, the important one, will be in July , because there are things that cannot be done remotely. "You can't form video corridors," they joked around the president of the European Council, Charles Michel . "You can't build trust," because even though you only see a president in front of the camera, lots of advisers surround him at the table. And there are decisions that in Brussels, at important moments, are made alone, in a room without assistants or mobile phones.

The situation seems to be stuck. No one has moved openly in the past few weeks, or even months, but it is true that the rhetoric has dropped many decibels. Far are the bravado, the challenges and the cockiness of those who in January arrived at the Budget Summit carrying fat books to kill time on a sleepless night. Now, perhaps due to the urgency, due to the severity of the crisis, perhaps due to the format, there is at least more responsibility and respect in public addresses. "Nobody has rejected the proposals from the outset and that is a good sign. It does not seem like much ambition but with instruments of this size the objective is that nobody says no from the beginning," they celebrate in Brussels.

Division

The fractures, yes, remain. The so-called frugal ( Austria, the Netherlands, Denmark or Sweden ) keep saying that the Budget for 2021-2027 cannot be as high as the European Commission proposes, of up to 1.1 trillion euros. And that even more money must be taken from the Common Agricultural Policy and Cohesion compared to the previous legislature. To focus on the items that qualify as "modernizing", such as the green or digital transition. In addition, they want there to be no direct transfers, or if they happen to be minimal, in favor of more loans. And they would like in any case a much stricter conditionality for those lines of credit. That they force real reforms and even fiscal adjustments in the medium term.

On the other side, the friends of cohesion or growth, with Spain among them. They want an ambitious financial framework and for which the 750,000 million proposed by the Commission seem good, or even few. That they do not want conditionality beyond reason and appropriate vigilance so that the funds are used properly. And they don't want to give up transfers.

Then there are the big ones, like France and Germany, trying to hinge and find compromises. On July 1, Germany assumes the temporary presidency of the EU, it will be his turn to manage this negotiation if it is not concluded in the coming weeks, and they hope that he will not join the next phase of Brexit, a possible outbreak of the virus or issues that ooze, like the migration issue in the EU and borders.

Exchanges are expected this Friday, but no notable progress. Neither in the keys of distribution of money, priorities or even deadlines. It is the type of negotiation in which everything is open while one part is pending. You have to combine impossible interests and that requires more technical work, more commitments and much bilateral face-to-face and old-fashioned leadership.

Options

The Commission, with its proposal, has managed to avoid that the Frugal and the Visegrad group ( Poland, Hungary, the Czech Republic and Slovakia ) have a common front, as there are conflicting interests on important issues. There are so many options for marketing, haggling. From large items such as the CAP or Cohesion, which add up to more than 50% of the total Budget, to the resources for the so-called Fair Transition Fund for green conversion. There, Spain was losing on paper, but it recovers with transfers and loans, which would mean up to 140,000 million euros according to the Brussels proposal.

To seduce the austere, you can play with the overall size of the package, with a little less than transfers or the start date of the repayment of the debt. Or without a doubt, reinforcing much more the aspects of the conditionality required for aid, something that the European People's Party has used as a battering ram this past week. There is also the trick of the so-called 'rebates' , the compensatory checks that were invented for the United Kingdom but from which the Dutch, the Danish, the Austrians and even the Germans benefit. Many, starting with the European Parliament, who would like to eliminate them, or at least get it fixed that those of today will be the last. But it will be difficult and could actually increase a bit to appease the most orthodox net taxpayers.

"What is important about this European Council is not to go backwards," sums up a senior European source who has participated in the front row in the design of the instruments. Time is short. After the discussion, Michel's team will reflect for a few days, evaluate all the positions and put on the table a new proposal with specific numbers, a NegoBox , in EU terminology. And in July, perhaps on the 9th, the delegations will come in person and with the knives ready. Some to assault, the rest to defend. It will be the next appointment, but nobody dares to think that the definitive one.

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