BRUSSELS/BERLIN, July 2 (Xinhua) -- German Chancellor Angela Merkel and President of the European Commission Ursula von der Leyen on Thursday pushed for an agreement on the multi-billion-euro recovery fund to cope with the economic difficulties caused by the coronavirus pandemic.

A large part of the fund, deemed vital for Europe's economic stability, would be in grants for European Union (EU) member states, hence sparking controversy which is feared to lead to lengthy negotiations.

URGENT SCHEME

In a joint press conference after talking via video link with von der Leyen, Merkel said everyone is now clear there are plenty of difficulties concerning the economic package and she hoped that an agreement could be reached in July as she "sees no alternative to an agreement during this summer."

The 750-billion-euro (over 840 billion U.S. dollars) rescue package proposed by the European Commission has prompted divisions among EU governments as the Netherlands, Austria, Sweden and Denmark -- the so-called Frugal Four -- insist the recovery fund can only be based on loans that need to be paid back later.

Merkel reiterated the urgency for a scheme, warning that Europe is facing a difficult time and the impact of the pandemic on the economy has not yet faded.

"We see every day that the virus is not gone," said Merkel, adding that the world is watching what Europe can achieve here.

According to the German chancellor, the answer to the unprecedented crisis needed to be "massive and really have an effect." She said intensive talks are already under way. "We will work hard, and we will show resolve," Merkel noted.

GERMANY STEERS

Von der Leyen echoed Merkel's words, saying the next six months would be crucial as the region is now faced with a severe economic downturn.

"So it's a huge time pressure, but it is the crisis that sets the pace. Every day we lose, we will be seeing people losing their jobs, companies going bust, the weakening of our economies. So every single day counts," said von der Leyen.

The recovery fund has to be approved by the European Parliament and then ratified by members states' national parliaments.

Von der Leyen added that the "gigantic task" to forge an agreement needs member states to look beyond their interests and a good steer of Germany's EU presidency, which began on July 1.

Merkel's talk with von der Leyen was already interpreted as the second vital step to rally support for the money to cushion the economic pains caused by COVID-19.

On Monday, Merkel met with French President Emmanuel Macron and announced together their backing for a "strong and efficient" recovery fund.

"If Germany and France agree with each other, other EU nations might not all agree. If Germany and France disagree with each other, it's a big impact on the EU solidarity," Merkel noted.

Germany and France proposed in May a smaller fund to the tune of 500 billion euros in grants for the hard-hit countries in EU.

A LOT TO BE DONE

According to the German Press Agency (dpa), an EU summit on July 17 is set to decide on the recovery fund.

Merkel will be working closely with European Council President Charles Michel to broker a deal as discussions intensify ahead of the summit, dpa reported.

Sources said that besides the opposition from the Frugal Four, there are still plenty of details to be discussed and a main issue is how the funds would be shared among the member states.

Some insist allocating the money based on the unemployment rate at pre-pandemic period while others recommend taking into account the economic situation during the pandemic.

European Parliament President David Sassoli had earlier called the recovery fund proposal "ambitious", but added: "it only scratches the surface of what needs to be done." (1 euro = 1.12 U.S. dollars)