Orbán says rule-of-law deal 'centimetres' away

"I think we have a good chance to close this issue this week at Thursday's EU summit. We are a centimetre away," Orbán told a Polish broadcaster after the meeting, but he did not go into details.

"We have a chance for a Polish-Hungarian victory," he added.

While Orban and Morawiecki have held several meetings, both online and in-person, in the last days and weeks, this time, crucially, they were joined by the leader of Poland's ruling party, Jarosław Kaczyński who is seen as the de-facto leader of the country, local media reported.

The two leaders from the minor coalition partners of the Law and Justice (PiS) Party were been present to possibly seal a deal ahead of EU leaders' summit in Brussels starting on Thursday.

German chancellor Angela Merkel has been at the helm of trying to find a compromise to lift the Polish and Hungarian vetoes and unblock the budget and recovery fund, aimed at boosting the bloc's economies ravaged by the pandemic.

The EU Commission has prepared plans to go ahead with a version of the recovery fund without Poland and Hungary, and to move ahead with at least a provisional budget.

Morawiecki warned earlier on Tuesday that another EU summit may be necessary to agree on the issue.

"It may happen that another summit will be necessary. Maybe there will be more long months of negotiations and a possible provisional budget. No scenarios should be ruled out at this stage," he said.

One possibility for a compromise could be a declaration, attached to the rule-of-law conditionality, on how it will be used - that alleviates the concerns of Hungary and Poland.

But while the conditionality has been politically agreed by the European Parliament and 25 member states, it has not been formally approved yet.

"Behind the scenes, we are working to find a solution that all 27 member states could agree to," German minister for Europe, Michael Roth, said on Tuesday after a virtual meeting of EU affairs ministers.

"The [German EU presidency has very little influence because we have the demands of Poland and Hungary, and on the other hand we have clear statements of European Parliament and an array of member states," Roth told reporters.

"The legal framework, the text itself of the conditionality should not be opened up again, that's what they say, and today certain delegations emphasised this again," he added.

"Over the coming days, we don't want to leave any stone unturned when it comes to finding a solution," Roth said.