• European Council. New Michel proposal: cuts and "emergency brake". Count: stalled negotiation
  • The positions stiffen, Recovery Plan blocked
  • European Council. Divergences on funds. Conte wants an adequate answer. Merkel: "Difficult agreement"

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July 19, 2020 The second long day of European leaders seeking an agreement on the Recovery Fund and the multi-annual budget of the European Union ends with another stalemate. After more than 12 hours of negotiations, bilateral meetings, mini-summits and restricted meetings, the heads of state and government failed to reach a compromise and the President of the European Council Charles Michel reconvened the meeting for today at noon. 

The second draft negotiation presented by Michel in the morning, which met many requests from the frugal members, was not enough to soften the positions and the controversial points on the table remain those that divide the countries for the past three days, starting with the governance of the Recovery Fund , with the Netherlands insisting on a unanimous decision by the governments on the national reform plans of the member countries. Another issue still open is that of respect for the rule of law as conditionality for obtaining recovery funding. This is where there is opposition from Hungary and Poland. Warsaw is also opposed to having to accept that European transfers are conditional on compliance with climate regulations. 

German Chancellor Angela Merkel allegedly objected to the presentation of a new negotiating proposal with further cuts in Recovery Fund subsidies. According to rumors, a basic agreement was reached on the governance of the recovery fund and on the amount of non-refundable support to be given to states in difficulty. But after the compromise, Holland and the other three so-called frugal countries (Denmark, Sweden and Austria) would have demanded further cuts. Diplomatic sources confirm that if the friars continue to insist on unanimity also tomorrow, the negotiations will end without shared decisions.

"Europe is being blackmailed by frugal countries," said Prime Minister Giuseppe Conte in the evening. If the prime minister fails to break down the wall raised by the Dutch prime minister, he cannot however accept that, as Rutte claims, a single state has the power to block the disbursement of funds to a country that does not implement reforms. Therefore, to avoid scenarios too penalizing for Italy, he decides to raise his tone. He declares that he is not willing to give up even one euro, because the negotiation is "very important for the interest of Italians, but also of Europeans". And it calls into question, in the multi-year budget, the increase in rebates, discounts that The Hague cares about and that in the latest mediation proposals have even increased and warns that from Monday it will be necessary to deal with those who do "tax dumping", such as the same Holland, or "trade surpluses", as well as Germany.

At the negotiating table, Conte could accept that the share of the loans (which should be repaid from 2026) and the duel of subsidies will increase of the 750 billion of the Recovery. According to the first calculations, Italy would get an overall figure that is still around 170 billion. In any case, the prime minister cannot return to Rome with the shadow of a trojka ready to freeze the funds.