Clock ticks as EU leaders edge toward rescue deal

by BLOOMBERG / pic by AFP

After three days of negotiations, European Union leaders are on the brink of approving a jumbo stimulus package aimed at pulling the region out of its worst recession since World War II.

But it’s not yet a done deal, and localized interests could still scuttle it when the 27 heads of state and government reconvene this afternoon.

Just hours ago, an agreement was in jeopardy as familiar fault lines emerged between the richer northern nations and the southern countries worst affected by the coronavirus.

Budget hardliners led by Dutch Prime Minister Mark Rutte opposed most of the plan’s architecture, including its size: as much as 750 billion euros ($859 billion); the fact at least half of it wouldn’t need to be repaid; and that the package would be financed by jointly issued bonds.

But in the wee hours of today, a new offer gained traction: 390 billion euros would be made available as grants, down from an original 500 billion euros. The holdouts are also expected to get rebates from what they pay into the EU’s budget — an earlier proposal would have pegged that at 46 billion euros over seven years.

Two contentious issues remain: how to set cast-iron guarantees that the funds will go to projects that will upgrade their economies and whether to make distributions contingent on member states’ adherence to European democratic standards — a prospect that Poland and Hungary are fervently against.

Leaders have already been arguing for months over the package. Failure to get a deal this week risks exacerbating the economic damage.