The talks, which opened on Friday, failed to bring any compromise on the stimulus package. On Saturday, the president of the European Council, Charles Michel presented a revised plan for the economic recovery fund, in what was seen as a move to ease the deadlock in debates and calm queries by the EU’s frugal, northern states. Michel proposed that the share in the free grants of the 750 billion euro recovery fund would be reduced to 450 billion from the earlier suggested 500 billion with the remaining 300 billion meant for loans. However the discrepancy between EU leaders on the level and conditions of spending led to a stalemate in debates on Saturday.
One of the thorny issues in the talks, is the proposed regulation on the access to EU funds in line with rule of law , which was strongly opposed by Hungary. Poland’s PM Mateusz Morawiecki had said that Poland was also against rule of law conditions on EU funds payouts, since as he said “there was no need for any arbitrary mechanisms which could lead to politically motivated states to take decisions as to which Poland will feel no commitment.”
Morawiecki on Sunday morning said that he considers the term "rule of law" greatly misused, "too often it is used as a deterrent" said the Polish prime minister, adding that Poland cannot agree to such a general statement, because it can be a threat, not only to Poland or countries of Central Europe. but could be a tool, used by more powerful states against other countries.
The Hungarian and Polish opposition on the mechanism has received the support of the Czech Republic, Slovenia, Latvia and Portugal, while the proposal to tie budget funds to states upholding European legal standards is backed by the northern EU states, Denmark, the Netherlands, Sweden and Finland.
Ahead of the Sunday formal start of the summit, the president of the European Council Charles Michel met with representatives of the so called northern ‘frugal five’ , the states which demand lower budgets and tougher conditions for handouts. Michel also held talks with prime ministers of the V4, the Visegrad Group comprising the Czech Republic, Hungary, Poland and Slovakia.
The head of the European Commission Ursula von der Leyen together with German Chancellor Angela Merkel and French head of state Emanuel Macron held talks with countries which stand on the southern side of the barricade: Italy and Spain.