Angry EU leaders battle to save deadlocked virus recovery summit

Netherlands' Prime Minister Mark Rutte (L) looks on next to Germany's Chancellor Angela Merkel ( 2nd L), President of the European Commission Ursula von der Leyen (2nd R) and France's President Emmanuel Macron prior the start of the European Council building in Brussels, on July 18, 2020, as the leaders of the European Union hold their first face-to-face summit over a post-virus economic rescue plan. The EU has been plunged into a historic economic crunch by the coronavirus crisis, and EU officials have drawn up plans for a huge stimulus package to lead their countries out of lockdown.(Francisco Seco / POOL / AFP)

Tempers flared in the conference room as frustration boiled over after a full weekend of haggling, with French President Emmanuel Macron upbraiding the Dutch and Austrian leaders and threatening a walkout.

The marathon talks chaired by EU Council President Charles Michel have failed to yield agreement over the size and rules for a 750-billion-euro ($860-billion) package of loans and grants to help drag Europe out of a recession caused by the pandemic.

Over a working dinner with the 27 leaders on Sunday, Michel made a fresh effort to win over the coalition of "Frugals" -- the Netherlands, Sweden, Austria, Denmark and Finland -- which has sought to cut the size of the package and impose strict rules on how it is used.

Amid growing fears the summit would collapse without agreement, Michel suggested cutting the grant portion of the deal to 400 billion euros -- down from his initial proposal of 500 billion -- and raising the loan part to 350 billion, up from 250 billion.

In a heartfelt speech over dinner, Michel reminded leaders of the devastating human cost of the pandemic -- 600,000 dead including 200,000 in Europe -- and urged them to come together to complete what he called a "mission impossible".

"The question is this: are the 27 leaders, responsible for the people of Europe, capable of building European unity and trust?" Michel said, according to a copy of his remarks seen by AFP.

"Or will we present the face of a weak Europe, undermined by mistrust?"

- Dogged Frugals -

But a senior aide to Swedish Prime Minister Stefan Lofven said they were only prepared to accept a maximum of 350 billion euros as grants in the package, and even this was subject to conditions.

"It's about the rebates, higher climate ambitions, and that we include a mechanism that makes so that countries will not be able to get money from the EU budget or this recovery package if they do not follow the principles of rule of law," Paula Carvalho Olovsson told the TT news agency.

Macron, who along with Michel and German Chancellor Angela Merkel has worked to find a compromise deal, could not contain his impatience as the Frugals stuck to their guns over dinner.

According to witnesses the French leader banged the table, attacked Austrian Chancellor Sebastian Kurz for leaving the room to make a phone call and accused Rutte of behaving like former British premier David Cameron -- who took a hard line at EU summits but ended up leading his country into a referendum to quit the bloc.

Officials said Macron denounced the two leaders for insisting recovery funds take the form of loans with strict conditions attached, rather than grants -- and had said he would rather walk away than make a bad deal.

- Veto demand -

A European source said the Frugals used the dinner to demand massive hikes in the rebates they get on their EU contributions, piling up fresh tensions.

At the start of what she said was probably the "decisive" third day of the extraordinary summit on Sunday, German Chancellor Angela Merkel had said there were still many divisions among the leaders, and so it proved.

Round after round of small group meetings went on all day as Michel, aided by Merkel and Macron, tried to drag the Frugals and the more indebted -- and virus-ravaged -- on board for a compromise, but progress was painfully slow.

Rutte wants member states to have a veto on national economic plans by the likes of Italy and Spain, in order to oblige them to pursue reforms to borrowing and their labour and pensions markets -- an effort that was angrily resisted by his Italian counterpart, Giuseppe Conte.

Meanwhile, another stumbling block emerged when Hungary's hardline premier Viktor Orban accused Rutte of waging a personal vendetta against him and his country -- and vowed to prevent any agreement on efforts to tie EU spending to recipient countries' respect for EU standards.