EU chief pleads for Merkel to save bloc’s €750bn bailout – Huge leak from Brussels’ dinner

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The European Union’s most senior official has presented a so-called “negotiating box” to capitals in the hope of getting talks over the recovery fund back on track. In a bid to rescue the plans, Mr Michel has sketched out a compromise and presented it to ambassadors from the EU’s 27 member states. But critics have claimed his new proposal is “lacklustre” and still risks being rejected by opponents when European leaders gather in Brussels for a face-to-face summit on July 17.

Sources said the Council President promised to preserve the “size and ambition” of the recovery fund blueprint proposed by European Commission chief Ursula von der Leyen during a dinner with ambassadors last night.

Under her scheme, eurocrats would borrow €750 billion on international markets in order to distribute €500 billion in grants and €250 billion in loans to pandemic-stricken regions and industries.

Mr Michel promised to maintain the balance between loans and grants when discussions between EU leaders get underway.

While refusing to table significant compromises on the recovery fund, the Belgian claimed opponents could be handed concessions in separate talks over the bloc’s next multi-annual budget.

He suggested the €1 trillion package could be “slightly” reduced in size but not “at the cost of cohesion or farming” handouts.

He also hinted rebates on some of the wealthier member states’ budget contributions could be “part of the solution”.

And to satisfy sceptics, such as the “Frugal Four”, Mr Michel promised to look into attaching strings to any coronavirus aid packages, handing the Council more power over whether countries can spend EU money the way they want.

But he warned EU capitals that there is little room for compromise in the upcoming talks, declaring his proposal “the only way” to an agreement.

Mr Michel is set to be hit by opposition from the so-called “frugals” – Sweden, Austria, Denmark and the Netherlands – when talks get underway.

While the fiscally conservative capitals back the creation of a recovery fund, they have all signalled the bloc should rein in its spending.

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Dutch prime minister Mark Rutte has said the money should be distributed in the form of low-cost loans and not grants.

Whereas Austrian chancellor Sebastian Kurz has suggested the need for political strings to be attached to funding, such as austerity measures or economic reforms.

All of Mr Michel’s soft-touch compromises are aimed at winning the support of the four northern capitals.

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But one source suggested the Council chief had deliberately tabled a flimsy plan to give room for German Chancellor Mrs Merkel to rescue the talks.

The veteran leader currently holds the top job in the EU’s six-month rotating presidency.

The source said: “Michel is making the same mistakes he made last time round and is banking on Merkel to save the day.”

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