Charles Michel, the budget deal and the art of the terrace tête-a-tête

Sitting once again on the Terrace Where It Happened, Charles Michel confessed he had no Plan B if leaders had failed to reach a budget deal. But he did have a nuclear option if Emmanuel Macron tried to leave Brussels without an agreement, as the French president had threatened when talks deadlocked last Saturday night, ordering staff to get his plane ready.

“I knew that it was not possible to decide on such a difficult topic in one day or two days,” the European Council president said. So the former Belgian premier told leaders he would keep them in Brussels as long as necessary.

“It was a joke, but I told them that I know the Belgian prime minister very well and I intended to ask her to close all the Belgian airports as long as we don’t have an agreement,” he said. But the message behind the joke was clear: No one leaves.

For four days and four nights, Michel kept the leaders talking, even when they were angrily criticizing each other. On daybreak Tuesday, they reached an accord on a historic €1.8 trillion package including a recovery fund to tackle the economic fallout from the coronavirus and a seven-year budget — in a single summit, one of the longest in EU history.

How much the deal can be credited to Michel’s negotiating skills is open to debate. There was plenty of grumbling about his chairmanship as the talks, originally scheduled to last just two days, dragged on through the weekend.

Threats were not the only instrument in Michel’s toolbox.

In an effort to resolve the major sticking points, Michel held multiple meetings of small groups of leaders on the terrace of the Council building, with photos tweeted out to the world. That meant other leaders were waiting around for hours, to their frustration and the annoyance of their officials.

Others close to the talks said Michel had to rely heavily on Macron and German Chancellor Angela Merkel, who were often at his side for those terrace meetings.

But ultimately Michel presided over a landmark agreement that will create a €750 billion coronavirus crisis recovery fund, for which the bloc will take on an unprecedented amount of joint debt — representing a fundamentally deeper fiscal integration than ever before.

Looking relaxed if a bit drained, in a dark sport coat but no tie, Michel described in an interview with POLITICO how he managed the 27 heads of state and government whose wishes he needed to anticipate, and whose demands he needed to meet in order to secure a unanimous agreement.

He met them one on one and in groups. He met them in the morning and at night and in those small hours when it is impossible to tell the difference, alternating at times between tea and coffee so as not to get over-caffeinated, but fueled mainly by Coca-Cola Zero.

And, of course, he met them all together, at the round table in the plenary room, and over some meals — in the Council’s Europa building, where an array of extraordinary health precautions were taken, including limits to the size of leaders’ delegations, the banning of the customary horde of journalists, the frequent use of face masks and ubiquitous bottles of hand sanitizer.

Political calculations

Threats were not the only instrument in Michel’s toolbox. He said he calculated carefully when it was necessary to put forward new proposals in writing, and when it made more sense to float ideas for discussion.

Michel said he also sought to impose tough discipline to keep the big plenary discussions focused on three main topics — the overall size of the recovery fund, the mix of grants versus loans, and the governance mechanism — and to segregate discussion on the controversial topic of rule of law.

At one point, the rule-of-law issue was sub-contracted out to a group that included expected participants like Hungarian Prime Minister Viktor Orbán but also Latvian Prime Minister Krišjānis Kariņš, who had developed expertise on the issue while serving as a member of the European Parliament.

At several points, the talks appeared to stall, or to be on the verge of collapse.

After a first day of deadlock, Michel on Saturday morning put forward a new written proposal, a negotiating box in EU jargon, as a way of generating momentum.

And on Sunday morning after Macron’s threat to leave, Michel came back again with new architecture for a deal.

“I don’t think it was a joke,” Michel said of Macron’s threat to go. “I don’t think it was a form of bluff.”

Michel said he felt Saturday evening “was a serious moment.” He worked the phones through the night and came back with a new plan.

But on Sunday night when things got really tough, Michel held back yet another promised written revision, warning that it would be pointless unless leaders could break a stalemate over the total size of the recovery fund, and the amount of grants that would be included in it. Instead, he floated ideas in discussion but without putting anything new on paper.

One official who monitored the talks said a crucial breakthrough came that Sunday evening, when leaders were served an unceremonial “cold plate” dinner, and Michel warned them that he had hit a roadblock, with supporters of the grants program insisting on at least €400 billion, and the self-described frugal countries refusing to go beyond €350 billion.

Michel conceded that the toughest nut to crack was Dutch Prime Minister Mark Rutte, perhaps Michel’s closest friend at the table.

“He finally convened the meeting and he said ‘I cannot propose you a nego box,'” the official said, quoting Michel: “‘I have a proposal which gets the support of at least 22 countries but not from the others so I cannot propose it to you. OK, so what do we do now? Do we go on? Do I call it off?'”

A serious discussion followed including speculation about how financial markets would react to a failed summit. Finally, Swedish Prime Minister Stefan Löfven, one of the frugals pushing for a low number, spoke up.

“There was a long silence, and then … it was Löfven who said, ‘I prefer that we go on and we try to find an agreement.'”

A national official confirmed that account.

A spokesman for Löfven said the Swedish prime minister wanted to reach an agreement if Sweden’s and the frugals’ priorities were taken into account. The spokesman declined to comment further on the details of the negotiations.

Michel, in the interview, would not describe the statements made by individual leaders.

“It is important for the trust between the colleagues that we keep also some secrets,” Michel said. “I recognize that we had some hard talks around the table, but never at the personal level. It was ideological. It was professional, because there are different interests.”

Rutte’s red lines

Michel conceded that the toughest nut to crack was Dutch Prime Minister Mark Rutte, perhaps Michel’s closest friend at the table.

“It is not a secret, the prime minister of the Netherlands has a very strong position around the table,” Michel said. He went to see Rutte in The Hague before the summit, but left without persuading the Dutchman to show his cards.

“This visit to The Hague was very important for me to try to see, to feel, to understand, exactly what were the real red lines of Mark Rutte,” Michel said, adding that he quickly asked to dispense with a half dozen or more advisers in the room.

“I use a lot the technique of the tête-a-tête, in order to look into the heart, the eyes, and to feel where the red lines really are,” Michel said. In the conversation, he said, he understood that Rutte would take a strong line on the proposed governance mechanism by which disbursements of recovery money would be approved.

But beyond that, especially on the numbers, Rutte was inscrutable.

“Mark Rutte is really skillful, is a very strong negotiator. And I came back to Brussels without being certain what was the real red line regarding the amount. I had the impression that he had a margin of maneuver, but which margins exactly I was not certain,” Michel said.

But Rutte was not the only tough negotiator.

“It was much more complicated than that,” Michel said. “And you have different games at the same time, because you have different topics at the same time.”

‘Chaos’ Council

Back in February, before the coronavirus crisis, a first European Council summit dedicated to budget negotiations failed. Many leaders blamed Michel, saying he had engaged in too many individual meetings, keeping other leaders waiting, dragging out the talks, and making virtually no progress.

Michel still has his fair share of critics, some of whom find his Belgian approach to consensus-building through small meetings maddening to say the least. One official spoke of “chaos,” complaining about long hours waiting for their boss.

In the end, was a deal reached due to Michel’s skills, French emotions, German firmness, some flash of genius by one or another leader, or a solid underlying proposal by the Commission?

“I was so happy to use the terrace,” Michel said. “I am not saying without that we would have a failure, but it was part of the atmosphere.”

Some say it was the urgency of the pandemic, and the strong unity of France and Germany — the alliance of Macron and Merkel — that forced leaders to reach an agreement, rather than anything Michel did alone.

“He really needed the continuous help of the French-German axis, which I for the first time in many years saw functioning as a duo,” a veteran EU diplomat said. “I think they did a tremendous job.”

Or perhaps it was the fortunate delivery of a piece of furniture that turned out to be central to last weekend’s deal-making. The table for his terrace arrived just a week or two before the summit, Michel said.

“I was so happy to use the terrace,” Michel said. “I am not saying without that we would have a failure, but it was part of the atmosphere.”

Michel said that he slept little more than an hour each night of the summit, preferring to take a short nap and a shower and then get back to work. “Not really sleep,” he said. “But I took one hour, one-hour-thirty each night in order to have a break.”

The Council president said that the agreement the leaders reached would be seen as a pivotal moment in the story of European integration.

“We took a historic decision for this European project,” he said.

Sitting on the terrace overlooking the European Quarter, Michel was already contemplating another European Council summit in September, to catch up on work postponed by the focus on the pandemic.

But was there a back-up in case leaders had failed to reach a deal at the summit just gone? He was asked this question repeatedly during his preparations, said Michel, an empty bottle of Coca-Cola Zero and a plate of uneaten cookies on the table in front of him. “And I said, ‘Plan A is a successful summit and the Plan B is the Plan A.’”

Charlie Duxbury in Stockholm contributed reporting.

This article is part of POLITICO’s coverage of the EU budget, tracking the development of the seven-year Multiannual Financial Framework. For a complimentary trial, email [email protected] mentioning Budget.