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EU summit deadlock see talks stretch into Sunday

EU leaders failed to break the deadlock after two days of talks over the trillion-euro COVID-19 rescue package, and will return to the negotiating table on Sunday around noon.

Pushing talks into a third day, European Council President Charles Michel is hoping to find a compromise between the 27 heads of state and government, which has so far proved elusive.

Michel who chairs the summit is expected to reveal new proposals ahead of Sunday's meeting to bridge the gap between the 'frugal four' countries (Austria, Denmark, Netherlands and Sweden) and other countries who don't want to see big cuts and conditions added to the recovery fund.

Dividing lines

"The clash is very hard", Italian premier Giuseppe Conte said of the tensions with his Dutch counterpart Mark Rutte after the second day of negotiations.

The Dutch, along with the other "Frugals', are in favour of a larger share of repayable loans, rather than grants, and they want more conditions and control over how the money is spent.

A new plan presented early on Saturday by Michel was designed to offer concessions to the Dutch position.

The recovery fund, which had originally counted €500 billion to be handed out as grants, was reduced to €450 billion and an "emergency brake" was added to the mix. It would have allowed a member state to put a stop on the disbursement of funds until EU leaders met to discuss how money was being spent in another member state.

For Conte, the emergency brake from both a legal and political point of view "is not very practicable".

There were further tensions with Hungary which has threatened to veto the recovery package if there are conditions linking access to funding for respect for democracy and rule of law.

All in all, the scene is set for another tense round of discussions this Sunday.

For the leaders of countries hardest-hit by the coronavirus economic fallout, mostly around the Mediterranean, there is no time to lose in securing a package to shore up eurozone economies.

A warning came from the EU's budget commissioner, that the pandemic is not over. Johannes Hahn tweeted on Saturday that infections may rise in some countries, so it was "high time to reach an agreement which allows us to provide the urgently needed support for our citizens and economies".

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