German minister predicts rule-of-law solution in 'days'

"We are in the last phase of negotiations, it is not easy as we all know," Maas said in a panel discussion at the Berlin Policy Forum.

"But I am absolutely certain that we will be able to take decisions in the next couple of days for the EU budget as well as for the recovery fund, so we are able to release the money," he was quoted as saying by Reuters.

It could mean that the conundrum could be unblocked before EU leaders' next summit mid-December, or a decision would be made to circumvent the blockade.

There has been no sign from Budapest and Warsaw that they would ease their objection to the rule-of-law link that they claim could be used as a means of political pressure.

Polish prime minister Mateusz Morawiecki will travel to Budapest on Thursday for a one-day visit to consult Hungarian premier Viktor Orbán on the issue, Polish media reported on Tuesday.

The two premiers are meeting to coordinate their positions.

It remains to be seen what steps would be enough for Budapest and Warsaw to unblock their opposition during their negotiations with the German EU presidency.

The presidency and the European Parliament clinched a deal on the rules of the new mechanism earlier this month, and the parliament has said it is not renegotiating the agreement reached then.

"This European parliament will never give up on what we have achieved in the trialogue negotiations, we will not take one single step back. We have to respect 100 percent the text we adopted in the trialogue," Socialist group leader Iratxe Garcia said Tuesday, referring to the talks with the presidency.

There is little appetite among other member states too to reopen talks on the rule of law, with Dutch prime minister Mark Rutte saying last week that the compromise is the "bare minimum" for him.

"It is politically and practically impossible to reopen the compromise on the rule of law mechanism. It would not fly in the council [of member states] and any attempt would be immediately shot down by the European Parliament. No one should misread the mood in the council and the European Parliament. This issue is settled," a senior EU diplomat told EUobserver.

Legal guarantees and additional assurances could be given to Hungary and Poland, but it is unlikely that would be enough.

Some EU countries have also indicated they would go ahead without Hungary and Poland, if necessary - putting pressure on the two countries, which are key beneficiaries of EU funds.

The recovery fund could be agreed under an intergovernmental agreement or enhanced cooperation under EU rules, leaving out Hungary and Poland.

A provisional budget would cover 2021 - but without an agreement on the seven-year budget, new money would only be spent on agricultural, foreign affairs, administrative payments. For structural funds to continue an agreement needs to be reached among member states.

However, financing of current projects from the current seven-year budget would continue for another three years, meaning structural funds would not drop to zero from January.

Capital cities criticise

The mayors of Budapest and Warsaw - both from opposition parties in their respective countries - criticised their Polish and Hungarian national governments for vetoing the EU budget and Covid-19 recovery fund.

In a letter to the EU's Committee of Regions, they said the EU should cooperate directly with regions of member countries, and accused their countries' leaders of placing their "egotistical political interests" ahead of the EU's handling of the coronavirus crisis, Reuters reported.