• Conte a Rutte: risks jeopardizing the single market. Clash with "frugal" countries
  • European Council, Lagarde: "An ambitious EU agreement is better than rapid"
  • Recovery plan. No agreement, the summit continues
  • European Council. New Michel proposal: cuts and "emergency brake". Count: stalled negotiation

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20 July 2020Three days and three nights of negotiations and still the heads of state and government of the European Union have not managed to overcome Mark Rutte's resistance on the size of the Recovery plan. Yesterday, at the end of a long day of bilateral meetings, restricted meetings and mini-summits, the 27 sat at the plenary table around 19.30. A few hours later the President of the European Council, Charles Michel, suspended work for a break which was to last 45 minutes but which only resumed after 4 in the morning.

During the evening plenary meeting Michel launched a heartfelt appeal to the group of the frugal - Holland, Austria, Denmark, Sweden Finland - to reach an agreement that demonstrates the unity and strength of the union in facing such a crisis difficult. "Today there have been over 600,000 deaths worldwide" due to the pandemic, "we are facing an unprecedented crisis. My question is this: are the 27 leaders capable of building unity and trust in Europe? Or will we present the face of a weak Europe weakened by mistrust? ". So did the President of the European Council, Charles Michel. 

The President of the European Council presented leaders with a new negotiating proposal which foresees that the Recovery Fund maintains the overall figure of € 750 billion, while adjusting the composition of loans and grants to meet the frugal proposals. According to the Michel proposal, 400 billion would be disbursed as grants and 350 billion in the form of loans. 

But the frugal have been stuck on their positions demanding that aid still drop to 350 billion, as well as loans. Requests that would have been deemed unacceptable by all 22 other partners. The Netherlands, Austria, Denmark and Sweden have also requested that their repayments be raised to 25 billion.

It has been days that we continue to deal on the downside, "intervening to reduce the amount, to compromise the effectiveness, to interpose various operational obstacles" the suspicion that "we do not want to make an instrument that is in the interest of all that works. " So the Prime Minister Giuseppe Conte in his speech at the dinner. "This negotiation to lower the effectiveness of the European reaction makes no sense," he continued. "The grants are necessary for a speedy recovery to strengthen the resilience of the countries that have the most difficulties in economic growth". "The Recovery Plan cannot become a tool for conducting ideological battles," he concluded.

But in the late evening a crack also opened in the front of the penalty takers. European sources have indicated that while Austria and the Netherlands remain firm on their position, Denmark and Sweden would be ready to approach the Michel proposal. Proposal supported by all the other 22 European leaders, starting with Angela Merkel and Emmanuel Macron, as well as Italy and Spain. We are thinking about a compromise amount of 375 billion euros of grants, but at the moment, explain Italian sources, the request of the majority of member countries is to attribute 400 billion grants to the Recovery Fund. 

According to European sources, if an agreement was reached on the volume and composition of the fund, it would also be possible to reach an agreement on the question of the governance of the national reform plans, (there would be agreement on the fact that the national plans are examined and voted by the 'Ecofin by majority and not unanimously as the frugal ask), although it remains to be decided how to manage the subsequent transfer of national plans to the European Council. 

Yesterday the president of the ECB Christine Lagarde also intervened, underlining how much, in her opinion, is "better an ambitious agreement than a quick one". A signal also sent to the markets to alleviate possible tensions that could be triggered by the absence of an agreement tonight at the European Council.