Sunday

9th Aug 2020

Feature

Is Michel the man to forge the €1.8 trillion EU summit deal?

After a gruelling two-day summit on the long-term EU budget in February, it took 25 minutes for leaders to shoot down the only new proposal that emerged from a series of overnight bilateral talks with European Council president Charles Michel.

Frustrated by the lack of progress, many pointed the finger at the former Belgian prime minister, whose task is to shepherd the diverging positions to a compromise.

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  • Michel was welcomed by Dutch prime minister Mark Rutte earlier in July for one-to-one talks on the budget and recovery (Photo: Council of the European Union)

As EU leaders gather in Brussels on Friday (17 July) for the first time in person since the corona outbreak to try to agree on the 2021-27 budget and a €750bn recovery package, that task is even more daunting.

Concerns still persist in Brussels if Michel can manage the big egos, red lines, high emotions and pressure at the summit and forge an agreement.

"This is a crucial test for Charles Michel," said one senior diplomat from a eurozone member state.

Several diplomats described Michel being "traumatised" and "paralysed" by the failure in February, especially by Dutch prime minister Mark Rutte's stubbornness - who had been Michel's Benelux liberal ally as when Michel was prime minister of Belgium.

Some diplomats lament that Michel did not then move ahead immediately with a clear timeline right after the summit, losing momentum before corona then "changed everything".

Several diplomats also complain that in February, there was no real push for a new compromise, while bilateral meetings went on all night.

Read the room

"Michel cannot read the dynamics, or get the bigger picture," said one critical diplomat, adding that the Belgian style of consensus governing does not work at the level of EU leaders, where more pushing is needed.

Michel learned the lesson, others argue.

"Michel is doing better this time, he understood he needs to get deeper into the details," another senior diplomat said, adding that "in February he was detached, like it would solve itself."

"He learned not to take for granted what leaders tell him: not to under, or over-estimate leaders' declarations," an EU diplomat with knowledge of Michel's workings and thinking said. The same diplomat added that it is "not true" Michel was surprised by the outcome in February.

"He knew it would be difficult, he thought that there was a possibility, maybe there, he was wrong," the diplomat said, acknowledging that Michel did not expect that Rutte would not move an inch during talks.

"Michel now knows better how to ask for more from leaders than in February," the diplomat said.

Since the commission laid out its budget and recovery proposal in May - some of which was a no-go area for various member states - Michel started testing options and pushing leaders for alternatives.

He held a flurry of videoconferences and meetings with EU leaders, and briefed member states' ambassadors.

While tensions were known to exist, some diplomats were surprised by the timing of the departure of Michel's chief of cabinet, former Belgian EU ambassador Francois Roux in June. The post was inherited by his deputy, Frederic Bernard, a budget expert.

Merkel's momentum

But this weekend the dynamics of the negotiations will not only depend on Michel.

German chancellor Angela Merkel, whose country took over the EU's rotating presidency earlier this month, is determined to get a deal.

"Merkel is more motivated, and she wants to have a deal," said a senior diplomat.

"She invested a lot in it by moving away from her original position [of no joint debt]," the diplomat said, adding that the German chancellor will not want to "lose that momentum because Michel is muddling through, and being surprised that Rutte stabbed him in the back".

And it was not only the lessons from the February failed summit, but efforts to push for EU coordination on the coronavirus response where Michel gained more experience at EU level.

"Michel cooled down the atmosphere" after a March videoconference that descended into a "big fight", the EU diplomat said, adding that Michel helped move the conversation beyond 'coronabonds', and focus on the stability of the single market.

He also played a key role in getting Merkel to engage with Macron, after the French president signed the letter of around a dozen member states in March supporting coronabonds, which irked the German leader, the source said.

Difficult deck of cards

Michel was handed a difficult set of cards last year.

His mandate started just as the pressure to reach an agreement on the seven-year-old budget was reaching a boiling point after talks had not moved for almost two years.

The budget talks are traditionally the most difficult negotiations in the EU's life cycle, full of political land mines, this time made more divisive than ever by the shortfall the departing UK has left in the budget.

"Michel is an easy target," a diplomat from a large member state said on the criticism after the February summit, adding that it was due to the resistance of mainly frugal countries - but also so-called 'cohesion' countries - that a deal feel through.

"If there had been a deal, he would be celebrated," the diplomat added.

Michel's compromise budget and recovery proposal delivered last Friday will be the basis of this weekend's talks for leaders. Major disagreements remain, but none of the leaders dismissed Michel's ideas out of hand.

If leaders fail to close the gap this time, Michel will need to move fast towards a new proposal and a new summit, some diplomats insist.

Michel lays out compromise budget plan for summit

Ahead of expected tense discussions next weekend among EU leaders, European Council president Charles Michel tries to find common ground: the recovery package's size, and grants, would stay - but controls would be tougher.

Coronavirus

EU leaders to reconvene in July on budget and recovery

Most EU leaders want an agreement before the summer break, but the Dutch PM, leading the 'Frugal Four', warned there might not even be a deal then. But the ECB's Christian Lagarde has warned of a "dramatic" economic fall.

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EU Commission vice-president Maros Sefcovic pleaded with EU affairs ministers for "rapid agreement" on the EU budget and recovery plans to be unveiled on Wednesday - but an agreement and ratification process has its risks.

EU summit enters fourth day with recovery deadlocked

After bilateral negotiations continued all Sunday night, mostly to try to convince the 'Frugal Four' to move their red lines, European Council president Charles Michel is expected to table a new proposal on Monday afternoon with €390bn in grants.

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