Merkel says no deal in sight over EU rescue fund

 German Chancellor Angela Merkel said there's no deal in sight to resolve a standoff with Poland and Hungary over their vow to veto the European Union’s $2.2 trillion spending package, as the two nations' leaders prepared to meet for a second time in a week.

Merkel and other EU leaders are piling pressure on Polish Prime Minister Mateusz Morawiecki and Hungary's Viktor Orban to relent on their opposition to tying the distribution of EU funds to the rule-of-law.

The two eastern Europeans are slated to meet later on Monday to discuss the "next steps" after delaying the EU's seven-year budget, including some 750 billion euros ($900 million) of pandemic aid. Merkel said she'll continue to work for an agreement to the last moment, but a resolution wasn0t yet at hand.

"I can't report mission accomplished, as much as I would like to," she told lawmakers at a European parliamentary forum.

Europe's longest-serving leader is battling on multiple fronts and has been unable to break a deadlock holding up the EU's landmark recovery package.

While Hungary and Poland have long flouted democratic values that other EU countries hold dear, officials in Brussels have struggled to discipline them. That changed with the proposal to tie development cash to upholding democratic standards.

Morawiecki and Orban demanded changes to the proposal at a first meeting on 26 November prompting other EU members to turn up the heat. France said that unless they drop their veto within days, it could lead to a severe and potentially existential disruption to the 27-nation bloc still coping with Brexit.

With the next summit of EU leaders slated for 10 December, the governments in Warsaw and Budapest have dug in. One of Morawiecki's deputies, Waldemar Buda, blamed the confrontation on "a group of leaders who are absolutely liberal and left-wing and impose their views on all countries."

The changes Orban and Morawiecki demanded face outright rejection from net contributors to the EU budget. Countries, such as The Netherlands, say the rule-of-law provision is the minimum needed to uphold the bloc's core values.

One EU diplomat said Hungary and Poland are moving toward deeper isolation. Brussels is investigating the two countries over democratic backsliding, making them prime candidates for cuts to funding that could top a combined 180 billion euros ($215 billion) in the coming years.

The domestic situation is getting more precarious too, with majorities in both Hungary and Poland backing EU membership, which has helped transform their economies through funding that far exceeds what they pay in.

Poland has been racked by protests over harsher abortion rules. Business groups including banks and employers’ associations sent a protest letter to Morawiecki Monday, saying the veto plan would leave Poland “with no partners and no money.”

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