Without the agreement of the stingy and the poor

The European Union's plan to breathe life into economies crippled by the coronavirus pandemic hung in the balance yesterday as leaders argued over how to divide the huge recovery fund and what conditions to set for countries to receive funds from the fund.

On the third day of a tense summit in Brussels, the 27 EU member states were still trying to find a compromise on a €1,8 trillion (thousand billion) package for the bloc's next long-term budget and recovery fund to pull Europe out of its deepest recession since of the Second World War. Reuters diplomatic sources said it was unclear last night whether the summit would continue today or whether EU leaders would try again to reach a deal next month.

European Central Bank President Christine Lagarde told Reuters that European leaders would do better to agree on an "ambitious" aid package than to reach a quick deal at any cost. "Ideally, the leaders' agreement should be ambitious in terms of the size and composition of the package ... even if it takes a little more time," she said.

Most of the proposed recovery fund of 750 billion euros, which would be raised from the capital market by the European Commission, would be intended for the hard-hit Mediterranean countries on the edge of the Union.

Points of contention are the size of the fund and the ratio between grants and loans. So-called austere countries, led by the Netherlands, are trying to limit the size of the fund in talks that highlight the gap between the EU's north and south. Reuters reported last night, citing diplomatic sources, that the leaders were trying to agree on 350 billion euros in grants - significantly less than the 500 billion initially proposed - as a possible compromise with the North, although Italy objected to the terms for distributing the money. proposed by the Netherlands.

"The amount of grants is to be or not to be," one diplomat told Reuters.

Differences were also highlighted in relation to a proposed new rule of law mechanism that could freeze funding to countries that flout democratic principles.

Hungary, with the support of its Eurosceptic ally Poland, threatened to veto the financial package if the distribution of funds depended on the conditions for fulfilling the democratic principles demanded by the more liberal members from the north and west of the bloc.

The Prime Minister of Luxembourg, Xavier Bethel, said that such conditions are necessary in order to preserve the democratic values ​​that represent the backbone of the European Union.

"Because Europe is not a grocery store where you can choose what you want and what you don't want." "Europe, above all, represents the values ​​we protect," he said.

According to some sources, this summit represents a critical moment for the nearly 70-year-old European integration. Failure to reach an agreement during such a severe health and economic crisis could further fuel doubts about the bloc's viability and unnerve financial markets.

Greek Prime Minister Kyriakos Mitsotakis, whose country was recovering from a decade-long debt crisis when the pandemic hit, called for unity, saying Europe could not afford to appear "divided or weak". Some European diplomats told Reuters that talks could continue today, although it is more likely that a new summit will be held at the end of July or in August if no agreement is reached.