BRUSSELS (AP) — EU nations were heading Wednesday for a compromise deal with recalcitrant members Hungary and Poland over the bloc's landmark 1.82 trillion-euro ($2.21 trillion) long-term budget and coronavirus recovery package, and its controversial linkage to respect for the rule of law.

One diplomat of an European Union nation said “a happy end is in the making," with the relentless work of Germany, which holds the EU's rotating presidency, paying off only hours before the 27-nation bloc's year-end summit, starting Thursday.

The stimulus package is crucial for many European countries whose economies have been devastated by the pandemic. But Poland and Hungary, which agreed on the deal in July, then vetoed the package because of a new mechanism that would allow Brussels to cut off EU funds to countries that violate the bloc’s democratic standards.

Both Hungary and Poland, which have conservative, nationalist governments that have been accused of undermining judicial independence and media freedoms, have said they fear the EU mechanism will be used to punish their values.

But just days after it appeared that their 25 EU partners might go it alone and create a coronavirus recovery package without them, EU Council President Charles Michel, who'll chair the summit, was upbeat, saying in his letter inviting leaders to Brussels: “I am confident that we can find an agreement on a common package."

Already on Tuesday, Hungarian Prime Minister Viktor Orban had predicted that “we have a good chance to close this case this week during the summit meeting on Thursday. We are just one centimeter away.”

In Poland on Wednesday, parliament Deputy Speaker Ryszard Terlecki, who is a prominent member of the ruling party, said that “budget negotiations are ongoing, but it seems that we will reach an agreement that will satisfy us.”

State news agency PAP also quoted Terlecki as saying Poland will be able reach a situation where “the mechanism of supervision over the EU’s budget and the fight against corruption will be separated from the arbitrarily interpreted provision on the rule of law.”

Two EU diplomats and an official said the solution would take the form of a declaration clarifying that the rule of law mechanism would not be used against any country without a ruling from the EU’s top court, the European Court of Justice, first. That process could take a year.

The diplomat said that, at a meeting of ambassadors preparing the summit, the envoys from Poland and Hungary "seemed to be very pleased with it,” but it remains up to the leaders to give the plan the political all-clear, so “the thing is not done, but we are very near.”

The officials were not permitted to speak on the record as the deliberations were at a sensitive stage.

If EU leaders fail to adopt the budget for 2021-2027 before the end of the year, the bloc can only function on limited resources, with a maximum of one-twelfth of the budget for the previous financial year to be spent each month. Many projects for Poland and Hungary — which are already being formally investigated by the EU for their potential violations of the rule of law — could be held up.

European officials had threatened that the EU’s 25 other nations would launch the recovery plan without Poland and Hungary.

Under an enhanced cooperation procedure, a group of EU nations can decide to move forward in situations where all 27 countries are not on the same page. If the standoff continues, such a move could at least help unlock the bloc’s 750 billion-euro ($909 billion) economic recovery package.

Speaking after chairing a videoconference Tuesday of European affairs ministers, German minister Michael Roth said that reopening the agreement on the rule of law mechanism was not an option, and that Berlin remained committed to finding a compromise that would involve all member states.

“We hope to be able to achieve success in the next few hours or days,” he said.

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Samuel Petrequin in Brussels and Monika Scislowska in Warsaw contributed to this report.

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