Greek PM meets with five EU leaders over bloc's budget

Greek Prime Minister Kyriakos Mitsotakis held talks in Brussels on Friday with the leaders of Germany Angela Merkel, France Emmanuel Macron, Spain Pedro Sanchez, Italy Giuseppe Conte and Portugal Antonio Costa in a bid to break a deadlock in negotiations for the European Union’s 2021-2027 budget.

The leaders of the six member-states were seeking to find common ground on a range of issues, after a day and a night of talks failed to bridge divisions between richer and poorer nations over the size of the next budget and what to spend it on.

Greece’s main priorities are safeguarding the resources available in farm aid through the Common Agricultural Policy and increasing cohesion funds.

Arriving at the summit on Thursday, Mitsotakis had said that “we cannot be expected to do more with less.”

“We need a bigger envelope if we want to support at the same time traditional policies like cohesion and the common agricultural policy… If we want to be very ambitious, we will need more resources,” the Greek prime minister said in doorstep comments.

His comments were a response to the tough stance adopted prior to the meeting by Denmark, Austria, Sweden and the Netherlands, who insist that the budget cannot top 1 percent of economic output, earning them the moniker Frugal Four. That stance had not changed on Friday.

Expectations for a breakthrough were low as the 27 national leaders reconvened on Friday. They had spent a day and a night in talks that failed to bridge divisions between richer and poorer nations over the size of the next budget and what to spend it on.

“I don't think we are going to reach an agreement,” said Danish Prime Minister Mette Frederiksen.

Her Romanian colleague, Klaus Iohannis, said another summit of EU leaders would be needed to break the deadlock. Czech Prime Minister Andrej Babis channeled frustration, saying the leaders “can go straight home” if the four frugals do not budge.

Some EU countries want extra funding to match new ambitions to fight climate change and manage migration, some want a continued focus on development and farm aid, and some are pushing for greater realism in recognizing the 75 billion-euro ($81 billion) fiscal shortfall left by net contributor Britain's departure from the EU.

A baseline proposal to cap the budget – which will run from 2021 to 2027 – at 1.074 percent of EU gross national income, or 1.09 trillion euros ($1.18 trillion), faced criticism from all quarters.

Dubbed the Frugal Four, the bloc’s wealthy net contributors want a limit of 1 percent and refuse to pay more to make up for the loss of Britain’s fees. Their less-developed peers want to keep generous aid coming.

After an initial session of all 27 leaders on Thursday afternoon, they broke for separate face-to-face meetings that went through the night and until 0600 GMT on Friday.

“The bilaterals took forever. But it seems things have not moved, the frugals keep on insisting on their position,” one diplomat said on Friday morning.

An EU official confirmed: “The position of the frugals has not changed an inch ... so there is not much to go on.”

A French diplomat echoed the sentiment: “I'm not very optimistic. Because of the frugals.”

EU leaders have until the end of the year to agree, so chances of an early compromise appear low.

Beyond the size of the budget, the other fight is what to spend it on. The poorer eastern and southern nations want to hold on to development aid. They are backed by France, Ireland and others in seeking to uphold major farm subsidies. But Germany, the Netherlands and others want to shift funds towards new priorities, including combating climate change, managing migration and expanding the digital economy.

The Germans and Dutch are also leading a small group who want to preserve rebates that reduce their payments to the current 2014-20 budget. Every other EU country is against that.

Poland and Hungary – where nationalist and euroskeptic governments stand accused of flouting democratic standards – refuse to link EU aid to upholding the rule of law.

“If we are so far apart, there is no basis for discussion,” Babis said.