It's the moment of truth for EU leaders.

 Pressure is mounting for them to quit squabbling and craft a plan to mitigate the economic carnage caused by the coronavirus pandemic. But even as the death toll rises and a recession looms, expectations ahead of Thursday's video conference were strikingly low.

The task at hand appears manageable, given the circumstances: figure out how to finance what could be a $1.5 trillion recovery fund. But instead of forging unity, the task has only pushed old fault lines to the surface.

The poorer, more indebted nations of the south, such as Italy and Spain, want the economic pain to be spread across the bloc, perhaps in the form of so-called "corona bonds," with the debt pooled. 

After all, they've been hardest hit by no fault of their own. But the richer, more frugal countries of the north, such as Germany and the Netherlands, are adamantly opposed to the idea of joint debt, fearing they'd be on the hook for the money.

During the meeting, Spain will put forward a new proposal, which could be the compromise everyone is searching for. Madrid is calling for a massive $1.6 trillion recovery fund that would finance grants, not loans. This means the money channeled to the countries in most need may never have to be paid back. The fund would be financed by perpetual bonds, which never mature and on which only the interest is paid.

It offers an escape from the contentious corona bond debate because it pools spending, not debt. Italy and France have already thrown their support behind the plan, although neither has completely backed down from the idea of a euro bond.

Long-term budget the long-term solution?                                           

Another option being discussed is using the bloc's next long-term budget, known as the Multiannual Financial Framework (MFF), to tackle the economic fallout. It's a familiar tool and one that would allow for direct transfers of public money. European Commission President Ursula von der Leyen described the MFF as "the mothership of our recovery" when addressing parliament on 16 April.

According to reports, the Commission is crafting a plan that would use the EU budget to raise money in the markets. The money would then be lent to hard-hit nations with low interest rates and long maturities.

But even that plan is riddled with problems. 

Budget negotiations are a notoriously bitter process – a problem exacerbated by the UK's departure from the European Union, which has left a gaping $75 billion hole in to fill. Just two months ago, leaders locked horns over increasing contributions by fractions of a percent. Now they'd be asked to perhaps double its size.

French President Emmanuel Macron said on Wednesday that Paris would not back an MFF that lacked the firepower to tackle the economic fallout of the pandemic.

Getting Germany onboard with a beefier budget will be key and there are signs of readiness.

"The instrument we can do it with is the EU budget. It must be possible to do things quickly in a crisis situation and then, of course, conduct a refinancing in the years after," Germany's finance minister, Olaf Scholz, told ZDF television on Thursday,

While financing the recovery fund will take center stage at Thursday's meeting, EU heads of state will also discuss the $590 billion rescue fund EU finance ministers agreed to two weeks ago. It offers safety nets for workers, companies and countries. If a consensus is reached, the European Council president, Charles Michel, said the money could be available as soon as 1 June.

European project 'at stake'

With more than 100,000 people dead and the deepest recession in living memory on the horizon, patience is running thin. 

Euroscepticism is on the rise in coronavirus-ravaged regions such as Italy and Spain, where many feel their European partners abandoned them in their greatest time of need.

"Everyone is aware that the future of the EU is at stake in how we respond to this extraordinary crisis," the French finance minister, Bruno Le Maire, said at a press briefing in Paris on Tuesday.

Italy's prime minister, Giuseppe Conte, echoed that sentiment, telling Italian lawmakers: "Either we all win, or we all lose."

Despite the urgency, not even the Council's president Michel is expecting Thursday's summit to yield a deal on how to fund the recovery. In his invitation letter to EU leaders, he wrote: "I propose that we task the commission to analyze the exact needs and come up with a proposal that is commensurate with the challenge we are facing."

Meaning the can could get kicked down the road once again.