Brussels Edition: Eyes on Budapest

Welcome to the Brussels Edition, Bloomberg’s daily briefing on what matters most in the heart of the European Union.

The leaders of Poland and Hungary, who effectively vetoed the EU’s 1.8 trillion-euro spending package, are meeting today as pressure builds on them to relent on their opposition to tying funding to upholding the rule of law. Prime Minister Viktor Orban will host Polish counterpart Mateusz Morawiecki in Budapest as the rest of the EU looks for any sign of compromise. One Polish official, however, signaled that without any plan to draw up a counterproposal, the meeting is unlikely to provide the breakthrough many are waiting for. The situation puts German Chancellor Angela Merkel, whose country holds the rotating EU presidency, in a tricky spot: She may have to further tweak the proposed mechanism without alienating countries like the Netherlands, which has said that the current draft is the bare minimum. Officials in Brussels say that even if some nations were willing to accept changes, frugal governments would veto the deal for fear that aid would be mis-allocated in the absence of democratic checks and balances in illiberal countries.