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The EU summit is deadlocked, and the recovery fund becomes an 'unfinished business'

Source: reuters.com
[International News]     20 Jul 2020
BRUSSELS, July 20(Reuters)- European Union member states leader have not broken the deadlock over renewed anti-epidemic plan after three days of discussions, but European Council President Michel (Charles Michel) has urged them to make a final effort to achieve the "unfinished task ".
The EU summit is deadlocked, and the recovery fund becomes an 'unfinished business'

BRUSSELS, July 20(Reuters)- European Union member states leader have not broken the deadlock over renewed anti-epidemic plan after three days of discussions, but European Council President Michel (Charles Michel) has urged them to make a final effort to achieve the "unfinished task ".

At a dinner in brussels, michelle reminded the eu's 27 nations leader more than 600,000 people worldwide have died of new-crowned pneumonia and that they should unite in the face of an unprecedented crisis.

"I hope we can reach an agreement... Tomorrow's headline will be that the EU has achieved an impossible task ," he said ." It is my sincere wish... we have been working on it for three days in a row. "

European Union countries leader disagree on how to build a large recovery fund and impose conditions on beneficiary member states. Europe is now experiencing its worst economic recession since World War II.

Extension of the summit to 1 200 GMT. Monday

Diplomats say they may abandon the summit and try again next month to reach an agreement. But as discussions continue into the early hours of monday morning, an agreement seems likely.

Countries are discussing a 1.8 trillion euro (2.06 trillion US dollars) plan, including the EU's next long-term budget and recovery fund.

The European Commission will raise 750 billion euros in capital markets on behalf of its member countries for the recovery fund, which will then flow mainly to the hard-hit Mediterranean countries. This would be a historic step towards further integration.


** With ambition over haste**

European Central Bank President Christine Lagarde said it would be leader best for countries to agree to an "ambitious" aid rather than rush to an agreement at any cost.

"Ideally, a leader agreement should be ambitious in terms of size and content... even if it takes more time ," she told Reuters.

Lagarde ' s comments indicate that if the summit fails, she is not worried that this may adversely affect the financial markets, especially because the European Central Bank has more than 1 trillion euros of funds to buy government debt.

News of the impasse at the eu summit has had little impact on early euro movements in asian markets, where analysts say there is still hope for an agreement.

"I believe that the market has long anticipated that the EU leader will not reach an agreement at this meeting, but will need to make the market confident that an agreement will be reached in August or September. "The research director of the Melbourne brokerage Pepperstone Chris Weston said.


** North VS South**

During the summit, several "frugal" rich Nordic countries pushed for the creation of a smaller recovery fund and tried to set limits on of spending between grants and repayable loans.

The tense talks, though shorter than the eu summit held in nice, france ,20 years ago, highlight the gulf between the north and south.

Italian Prime Minister Giuseppe Conte Conte accused the Netherlands and its allies Austria, Sweden, Denmark and Finland of "extortion ".

Dutch Prime Minister Mark Rutte Lute (Rütte)'s position reflects the country's political reality, and Dutch voters feel aggrieved that the Netherlands, on a pro rata basis, is one of the EU's largest net contributors to the budget.

At next march's election, he and his conservative ldp (VVD) face serious challenges from far-right eurosceptic parties.

Late Sunday, another attempt to reach a compromise failed. The northern countries rejected an agreement that envisaged a €400 billion non-reimbursable allocation, originally proposed for €500 billion. These countries say 350 billion euros is the limit.

There are also disagreements over the proposed new regulatory mechanism that could freeze funding for countries that flout democratic principles. Hungary, with the support of Poland, threatened to veto the scheme if spending depended on meeting the conditions to support it.

For some countries, the summit is a nearly 70-year European integration key time, and failure to reach an agreement could discourage financial markets and deepen doubts about the EU's viability.

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