After 4-day talks, EU nations clinch a $2.1 trillion budget and a virus aid deal

Bloc reaches consensus on ‘historic’ fund for countries hit hardest by the pandemic; summit was supposed to last 2 days but extended due to disagreements

German Chancellor Angela Merkel, right, speaks with French President Emmanuel Macron, left, during a round table meeting at an EU summit in Brussels, July 20, 2020 (John Thys, Pool Photo via AP)
German Chancellor Angela Merkel, right, speaks with French President Emmanuel Macron, left, during a round table meeting at an EU summit in Brussels, July 20, 2020 (John Thys, Pool Photo via AP)

BRUSSELS (AP) — Weary but relieved, European Union leaders finally clinched an unprecedented 1.82 trillion euro ($2.1 trillion) budget and coronavirus recovery fund early Tuesday, somehow finding unity after four days and as many nights of fighting and wrangling over money and power in one of their longest summits ever.

To confront the biggest recession in its history, the EU reached a consensus on a 750 billion euro coronavirus fund to be sent as loans and grants to the countries hit hardest by the virus. That comes on top of the seven-year 1 trillion euro EU budget. At first the grants were to total 500 billion euros, but the figure was lowered to 390 billion euros.

“Never before did the EU invest in the future like this,” Belgian Prime Minister Sophie Wilmes said.

“It is a historic day for Europe,” said French President Emmanuel Macron.

Dutch Prime Minister Mark Rutte, center left, elbow bumps with European Council President Charles Michel, center right, as German Chancellor Angela Merkel, right, walks by during a round table meeting at an EU summit in Brussels, July 21, 2020 (Stephanie Lecocq, Pool Photo via AP)

Just shy of being the longest EU summit in history, the 27 leaders all huddled back in the main room of the Europa center and bumped elbows and made jokes before giving the package the final approval.

“We did it!,” wrote summit host Charles Michel on Twitter. “Europe is united.””

“We showed our belief in our common future,” Michel, the EU Council president, added with obvious relief.

“There were extremely tense moments,” said Macron.

“An extraordinary situation demands extraordinary efforts,” German Chancellor Angela Merkel said as the leaders pushed on with one of the bloc’s longest summits ever. What was planned as a two-day summit scheduled to end Saturday was forced into two extra days by deep ideological differences among the 27 leaders.

Overall, spirits were high early Tuesday since the talks hit rock bottom Sunday night.

European Council President Charles Michel, left, speaks with French President Emmanuel Macron, second right, and Dutch Prime Minister Mark Rutte, second left, during a round table meeting at an EU summit in Brussels, July 20, 2020 (John Thys, Pool Photo via AP)

Dutch Prime Minister Mark Rutte, defending the cause of a group of five wealthy northern nations — the Netherlands, Austria, Finland, Sweden and Denmark — was on the brink of securing limits to costs and imposing strict reform guarantees on any rescue plan for needy nations. It was the focal point of the marathon talks that started on Friday morning.

The coronavirus has sent the EU into a tailspin, killing around 135,000 of its citizens and plunging its economy into an estimated contraction of 8.3% this year. Spanish Prime Minister Pedro Sanchez insisted the adoption of an ambitious plan was required as the health crisis continues to threaten the continent.

The bloc’s executive has proposed a 750 billion euro coronavirus fund, partly based on common borrowing, to be sent as loans and grants to the countries hit hardest by the virus. That comes on top of the seven-year 1 trillion euro EU budget that leaders had been haggling over for months even before the pandemic.

With Macron and Merkel negotiating as the closest of partners, the traditionally powerful Franco-German alliance could not get the quarreling nations in line for long.

The leaders mulled a proposal from the five wealthy northern nations that suggested a coronavirus recovery fund with 350 billion euros of grants and the same amount in loans. The five EU nations — nicknamed “the frugals” — had long opposed any grants at all, while the EU executive had proposed 500 billion euros.

The latest compromise proposal stands at 390 billion euros in grants.

European Council President Charles Michel (2nd L), German Chancellor Angela Merkel (3rd R), French President Emmanuel Macron (2nd R), and European Commission President Ursula von der Leyen (R) meet on the sidelines of an EU summit on a coronavirus recovery package at the European Council building in Brussels on July 18, 2020 (Francisco Seco / POOL / AFP)

All nations agree in principle they need to band together but the five richer countries in the north want strict controls on spending, while struggling southern nations like Spain and Italy say those conditions should be kept to a minimum. The five have been pushing for labor market and pension reforms to be linked to EU handouts and a “brake” enabling EU nations to monitor and, if necessary, halt projects that are being paid for by the recovery fund.

Rutte and others also wanted a link to be made between the handout of EU funds and the rule of law — a connection aimed at Poland and Hungary, countries with right-wing populist governments that many in the EU think are sliding away from democratic rule.

The diplomat from the major EU nation said that had been settled too but no details were available.

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