With Hungary and Poland both threatening to block the crucial €1.8trillion (£1.6trillion) budget and coronavirus recovery package, Ms Merkel has warned the EU may need to soften its stance next month. During negotiations over the mammoth package in the summer, the Chancellor tied the crucial funding to certain requirements in relation to the rule of law proceedings against the two member states. Due to that, both Poland and Hungary have threatened to block the ratification of the fund thus throwing the EU’s coronavirus recovery into crisis.
With states such as Italy desperate for the vital funding, Ms Merkel indicated compromises must be made to save the bloc’s future.
Ms Merkel told a videoconference to EU lawmakers on Monday: “Bringing all the member states together is now proving to be something about as difficult as squaring the circle.”
She added: “Some say: Don’t compromise and don’t change a single comma, and others or the same people say: But please come up with a result
“And that, I would say now, is exactly the task of politics, to turn apparent incompatibilities into a result with which everyone can live.
“But without a compromise, this will not work — and by that I mean a compromise from all sides.
“And that’s why I believe that, because this is a truly central project, we must all be prepared to compromise to some extent.”
She also warned lawmakers of the lack of spending capabilities if the Multi-Annual Framework and coronavirus rescue package are not agreed at a summit this month.
Under Article 7 of the Treaty of Europe, Brussels can activate rule of law proceedings against a state if the country in question violates its core values.
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Ahead of the EU summit next week, the two states have also vowed to join forces and veto any financial package which threatens the other.
It is crucial the package is agreed in order to release vital funding for states in order to aid their recovery from the pandemic.
The budget also runs from 2021-2027 and therefore needs approval as soon as possible.
Such is the dire state of relations between Hungary and Brussels that Prime Minister, Viktor Orban likened the EU to the Soviet Union.
One EU diplomat also expressed their concern both countries had now turned their back on the EU.
They added: “It is clear that there is absolutely no support for reopening the conditionality mechanism in the European Parliament or in the Council.