Poland Says EU Closer To Resolving Budget Row

Poland's President Andrzej Duda said on Wednesday that the European Union was a step closer to finding a compromise that would unlock its budget and virus rescue package after veto threats from Poland and Hungary.

Warsaw and Budapest last month blocked the EU's 1.8-trillion-euro ($2.1-trillion) budget and recovery package because of provisions, agreed by the other 25 EU members, linking funding to respect for the rule of law.

Both governments have been accused by Brussels of rolling back democratic freedoms, notably judicial independence in Poland and press freedom in Hungary.

"There is an outline of a provisional agreement on the EU budget and conditionality mechanism," Duda told reporters in the Czech capital Prague following talks with President Milos Zeman.

"Work and discussions are ongoing. This agreement is the result of very great efforts of the Polish and Hungarian parties, but also of the German (EU) presidency," Duda added.

Speaking on condition of anonymity, an EU official also told AFP on Wednesday that member states were discussing a "declaration" on the contentious mechanism tying funds to rule of law.

This would be a political statement explaining how the rule-of-law mechanism would function. It would not change the original proposal, but could offer the countries reassurance.

Following talks in Brussels on Wednesday, a second diplomat told AFP on condition of anonymity that there had been "positive first debate in the circle of EU ambassadors, at the same time a number of constructive questions."

The proposed compromise would now be sent to European governments and discussed by leaders, who are meeting in Brussels on Thursday, the diplomat added.

Poland's Deputy Prime Minister Jaroslaw Gowin told reporters earlier in Warsaw that "the reasons for Poland and Hungary to take a different position from other EU countries have practically disappeared."

"The position of the German (EU) presidency is also similar to the position of Poland and Hungary, but, of course, unanimity is required for an agreement at the European Council," said Gowin, who leads a junior coalition party in Poland's nationalist government.

"For now, there's agreement in the Warsaw-Berlin-Budapest triangle. I believe that this agreement will also cover the other 24 capitals of Europe," he added.

Berlin is taking the lead in the talks as it currently holds the six-month rotating European Union presidency, but it gave no hint of a compromise on Wednesday.

Speaking in parliament, German Chancellor Angela Merkel declined to predict whether a quick solution could be found in the dispute: "Unfortunately I can't tell you whether it will work or not."

Hungarian Prime Minister Viktor Orban expressed optimism about a deal during his working visit to Warsaw on Tuesday, saying "we have a good chance to close this file this week at the summit on Thursday".

"There is a centimetre that separates us," Orban said on Polsat News channel.

However, the nationalist Hungarian leader insisted that Warsaw and Budapest remained "on one side and that the German presidency is on the other. We have a chance at a Polish-Hungarian victory."

Polish Prime Minister Mateusz Morawiecki said on Tuesday that Warsaw was sticking to its veto threat and was prepared for all scenarios.

"We're prepared for months of talks and negotiations, but we are also prepared for a possible provisional budget, so we're not ruling out any scenarios at this stage," Morawiecki said.