Hopes for EU recovery deal rise after days of summit squabbles

Brussels - A deal on the economic aid plan will demonstrate that Europeans can step up to a crisis and remain united

European Union leaders said on Monday they were cautiously optimistic that agreement on a massive stimulus plan for their coronavirus-blighted economies was within reach, but tensions between them remained high after days of summit squabbling.
Slow to coordinate their initial response to the Covid-19 pandemic and already weakened by Britain's departure from the bloc, a deal on the economic aid plan would demonstrate that Europeans can step up to a crisis and remain united.
"It has been a long summit and a challenging summit but the prize is worth negotiating for," Irish Prime Minister Micheal Martin said as the Brussels summit dragged into its fourth day - approaching the record length set at a 2000 meeting in the French city of Nice.
Summit chair Charles Michel had urged leaders on Sunday to achieve a "mission impossible", reminding them that more than 600,000 people had now died from Covid-19 around the world.
However, diplomats said it was far from certain that the leaders could put aside the rancour that stood in the way of a compromise over hours of haggling through the weekend, and one said negotiations could run deep into Monday night.
Indeed, a session of all 27 leaders scheduled for Monday afternoon was delayed by two hours to 6:00 p.m. (1600 GMT).
Emotions ran high at a dinner on Sunday as a group of fiscally frugal northern nations led by the Netherlands stood their ground on the level of free grants within a proposed special recovery fund of 750 billion euros overall.
Polish Prime Minister Mateusz Morawiecki railed against the 'frugals' before negotiations resumed on Monday, branding them "a group of stingy, egotistic states that look at things very narrowly through the prism of their own interests".
Poland would be one of the top beneficiaries of the recovery package, receiving tens of billions of euros in grants and cheap loans, along with high-debt Mediterranean-rim countries that have taken the brunt of the pandemic in Europe.
Despite the rhetorical skirmishing, German Chancellor Angela Merkel said the leaders now had a new basis for a deal on the stimulus package and, linked to it, the EU's 2021-2027 common budget of around 1.1 trillion euros.
"We worked out a framework for a possible agreement last night after long negotiations," she told reporters. "This is progress and gives hope that an agreement can be reached today."
French President Emmanuel Macron lost patience in the early hours of Monday and banged his fist on the table in frustration at "sterile blockages" by the 'frugals', two diplomats said.
But by daylight, he shared Merkel's optimism, telling reporters: "I'm starting today with a lot of determination to make progress."
Hopes for a deal to help address Europe's deepest recession since World War Two sent Italy's borrowing costs to their lowest since early March and pushed the euro to a 19-week high.
Diplomats said that within the 750 billion euro recovery fund, 390 billion could be considered as non-repayable grants, a compromise between the 350 billion level of the 'frugals' and the 400 billion demanded by France and Germany.
Issues over tying payouts to economic and democratic reforms were still to be resolved, though diplomats said this would follow smoothly once there is agreement on the balance between grants and repayable loans in the recovery fund.
There were also differences over a rule-of-law mechanism proposed by liberal states in the bloc's north and west to freeze funding to countries that flout democratic principles.
Hungary, backed by its eurosceptic ally Poland, has threatened to veto the package if fund disbursement is made conditional on upholding democracy.