Acrimonious European Union talks over an unprecedented 1.85 trillion-euro ($2.1 trillion) EU budget and coronavirus recovery fund entered a third day Sunday with German Chancellor Angela Merkel warning that the summit of 27 leaders could still end without a deal.
The bitter marathon negotiations, which are taking place amid the unprecedented crisis of the coronavirus pandemic, have underscored the deep fissures within the 27-nation bloc with the traditional Franco-German alliance struggling to get its way.
"Whether there will be a solution, I still can´t say," Merkel said as she arrived early for the extra day of talks at what had been planned as a two-day summit in Brussels. "There is a lot of good will, but there are also a lot of positions. So I will join in working for it. But there may also be no result today."
Merkel and French President Emmanuel Macron walked out of heated talks late Saturday with a group of five so-called frugal nations led by the Netherlands pushing to limit the grants given to countries whose economies have been hardest hit by the pandemic and to impose strict conditions on how the money is spent.
"They run off in a bad mood," Dutch Prime Minister Mark Rutte said in the early hours of Sunday after Merkel and Macron's departure from talks.
The so-called Frugals were in talks with summit host Charles Michel early Sunday but the chances of quick progress appeared remote. Merkel and Macron refused to water down their proposals of aid while Rutte and others also stuck to their demands.
"It is a decisive moment," said an EU official, who asked not to be identified because the negotiations were ongoing.
Rutte is widely seen as the leader of the nations known as the Frugal Four - the Netherlands, Austria, Denmark and Sweden. He has long been known as a European bridge builder, but this weekend, his tough negotiating stance is being blamed for holding up a deal.
While Italian Prime Minister Giuseppe Conte said he has a good personal relationship with Rutte, he said the "clash is very hard" and that Rutte's threat of wielding a veto "is an unwarranted request."
Rutte and his small group of allies are 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 funded by the recovery fund.
"He can´t ask us to do specific reforms," Conte said. "Once (the aid) is approved, each country will present its proposals."
Rutte also wants a link to be made between the handout of EU funds and the rule of law - a connection that is clearly aimed at the likes of Poland and Hungary, countries that many in the EU think are sliding away from democratic rule.
"I don´t know what is the personal reason for the Dutch prime minister to hate me or Hungary, but he´s attacking so harshly and making very clear that because Hungary, in his opinion, does not respect the rule of law, (it) must be punished financially," Hungarian Prime Minister Viktor Orban said.
The urgency of the talks is clear. The coronavirus pandemic has pitched the bloc into its worst recession ever and killed around 135,000 of its citizens.
The EU executive has proposed a 750 billion-euro fund, partly based on common borrowing, to be sent as loans and grants to the most needy countries. That comes on top of the seven-year 1 trillion-euro EU budget that leaders have been haggling over for months.
All nations agree they need to help but the four richer nations in the north, led by the Netherlands, want strict controls on spending, while struggling southern nations like Spain and Italy say conditions should be kept to a minimum.
Macron said leaders need to compromise Sunday.
"I think it is still possible, but these compromises, I say very clearly, will not be made at the cost of European ambition," he said.
