EU Leaders Struggle To Reach Agreement On Financial Recovery Package Amid Pandemic

Leaders of the European Union on Sunday have yet to reach an agreement on a financial recovery package amid the ongoing COVID-19 pandemic. The EU leaders are on their third day of negotiations at the Brussels summit.

“We are going into the third day of negotiations today and it is certainly the decisive one,” said German Chancellor Angela Merkel. “At this point, we’ve properly worked through various issues including the size of the fund, how it is managed and also issues regarding the rule of law. I still can’t tell if there will be a solution.”

“There’s lots of goodwill, but there are also many positions. That’s why I will be among those pushing for an agreement, but it is also possible that there will be no result today,” she continued.

The European Commission has proposed a 750 billion euro ($857 billion) recovery package to help ailing European industries and countries amid the crisis. The package would include a mixture of loans and grants, with Spain, Italy and other Mediterranean countries given extra financial assistance. Southern European nations reliant on tourism have struggled with the economic impact of the outbreak.

Greek Prime Minister Kyriakos Mitsotakis called for EU nations to reach an agreement, saying the bloc could not afford to look “divided or weak.” Greece has struggled with a high amount of public debt to GDP.

Yet, the “frugal four” nations — Netherlands, Austria, Denmark and Sweden — have been skeptical of a robust financial package. The four countries would like aid to only be provided in the form of loans, not grants. Italian Prime Minister Giuseppe Conte had accused the frugal four, along with Finland, of “blackmail” amid the negotiations.

Dutch Prime Minister Mark Rutte, the informal leader of the frugal four, has previously said that, “Italy must learn to save itself.” He has claimed that Italy should enact more reforms so it can better deal with economic crises in the future.

The European Commission earlier this month projected that the 27-member bloc would see its total GDP drop by 8.3% this year. Italy is expected to face the most economic damage, with the country’s GDP facing an estimated 11.2% contraction in 2020. France and Spain are also projected to lose more than 10% of GDP this year.