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It was supposed to be a "simple" European affair, where leading politicians sat down and agreed to spend all those hundreds of billions in debt that the ECB had agreed to monetize, thus providing a boost to their crashing economies. Alas,
there is no such thing as "simple" in Europe, and after a third day of "marathon summit talks" - as the
FT put it and for good reason as it is already
the longest EU meeting since December 2000 - over Europe’s proposed €750BN response to the cobi19 pandemic on Sunday, the European Union once again failed to overcome gulfs that have split north and south, and east and west, and may send the Euro - which has soared in recent weeks - tumbling lower as without a finalized recovery fund Europe's economy is set to disintegrate (even more).
The protracted summit in Brussels, which began on Friday morning, has laid bare deep differences over the size, design and conditions attached to a planned multibillion-euro package of loans and grants designed to revive Europe’s economy after months of hibernation.
Yet even the biggest skeptics expected that it would be concluded by Sunday night, alas as Bloomberg reports European Union efforts to agree on the stimulus package faltered late Sunday "as leaders were unable to reconcile differences over how much of the recovery fund should be distributed through grants versus low-interest loans."
Sunday's chaos was to be expected after the summit in Brussels was "
suspended in acrimony" in the early hours of Saturday morning, after it became obvious just how stern resistance to handing out billions in grants would be.
One direct consequence of the impasse is that the total €750BN facility has already been cut to at most €650BN as European Council President Charles Michel floated a new proposal that
would reduce the size of handouts to 400 billion euros, down from an original 500 billion euros, according to a Bloomberg source. meanwhile, Dutch Prime Minister Mark Rutte, joined by his Austrian, Danish and Swedish counterparts - known as the Frugal Four - rejected the new offer, and stood by a pledge to limit grants to 350 billion euros.
"Frugal Four":
Sebastian Kurz, chancellor of Austria, Mette Frederiksen, prime minister of Denmark, Mark Rutte, prime minister of the Netherlands and Stefan Lofven, prime minister of Sweden
The impasse is hardly a surprise, as the el bichito pandemic has pitted a group of richer “frugal” member states — Austria, Sweden, Denmark and the Netherlands — against the likely biggest recipients of EU pandemic emergency funds. But leaders also clashed over how to police countries’ respect for the rule of law, with Hungary’s Viktor Orban facing off against western leaders over proposals to hardwire respect for fundamental rights into the recovery plan.
Meanwhile, the recently anti-frugal Germany, together with France, who have the backing of most of the bloc, are insistent that at least €400 billion of the package must be handouts in order to shield the fragile economies of southern Europe from the worst effects of the cobi19 pandemic.
And just as Germany was bashed by Europe's Mediterranean states, now it is the Netherlands' turn to become the most hated nation in Europe. As
the FT reported on Saturday quoting diplomats, "much of the ire at the summit table was directed at Mark Rutte. The Dutch prime minister’s insistence on a national veto over the spending of recovery money led to tensions with other capitals that boiled over during an ill-tempered late-evening dinner."