European Union chief Ursula von der Leyen will on Wednesday unveil a trillion-euro post-coronavirus recovery plan that she hopes will point the way to compromise between warring capitals.
The EU has plunged into its deepest-ever recession and pressure is mounting to unleash spending to drag 27 members out of the slump, especially those unable to help themselves due to big debts -- Italy and Spain foremost among them.
Those countries were the first on the continent hit by the coronavirus outbreak that has killed 174,000 in Europe and exposed the divisions hampering EU efforts to coordinate a response.
Rome and Madrid have bitterly accused their richer partners of ignoring their plight as Germany and others shell out tens of billions of euros to salvage their own economies. To bridge the divide, last week France and Germany suggested that the commission, the EU's executive arm, present a plan that would distribute half a trillion euros in grants to hard hit member states.
But a group of four northern member states have already rejected this and instead proposed their own scheme, which would favour loans with strict conditions at no eventual cost to taxpayers.
The Berlin-Paris agreement "is absolutely necessary, more than ever," said Josep Borrell, the EU's top diplomat and Spain's member of the Brussels commission.
"But at the same time, a Franco-German agreement is not sufficient. We need to bring the whole of Europe together," he said, aware of the battle ahead.
Since the virus struck, the Netherlands, Austria, Denmark and Sweden have been pressing hard on the brakes against runaway wealth redistribution in the face of the crisis.
These so-called "frugals" believe their southern partners are historic overspenders and failed to plan ahead.
Their model is the rescues used during the eurozone debt crisis when Greece and others received massive bailouts, but in loans and on condition that their economies were radically changed.
Germany had long been the de facto leader of the frugals, but Chancellor Angela Merkel surprised many by lining up with Paris and those calling for more "solidarity" among partners.
Merkel also broke with decades of German policy by endorsing the idea of a European loan of unprecedented size, breaking a national taboo against joint EU debt, perhaps a turning point in modern European history.
Her decision came on the heels of Germany's highest court casting doubt on the legality of bond-buying by the European Central Bank.
This endangered the crisis-fighting by the ECB, led by France's Christine Lagarde, which has done the heavy lifting by pumping more than a trillion euros into Europe's banking system.
A top EU official said last week that Von der Leyen's compromise would propose about one trillion euros through a mix of grants and loans.
Von der Leyen will unveil it to European Parliament on Wednesday and then devote the next weeks or months trying to find a palatable compromise among the EU nations and MEPs.
An EU diplomat predicted "very difficult talks", which are likely to drag on until at least July, while experts do not expect an agreement to be reached before September -- when Germany has taken over the rotating EU presidency in the second half of the year.
But the French and German proposal has already had some of its desired effect, sending the borrowing prices for Italy to very low levels on the financial markets -- a sign investors believe that Europe's robust economies will back their weaker partners.
Von der Leyen's commission has already delivered more modest recovery aid, including insurance for strained partial employment schemes as well as suspending the oversight of national deficit rules.
The 19 countries that use the euro single currency have meanwhile made available 540 billion euros in loan guarantees for emergency health spending.
Brussels, Belgium | AFP