Luxembourg's Prime Minister Xavier Bettel admits there will be plenty for his fellow EU leaders to fight about when they meet Friday to discuss a huge post-coronavirus recovery package.

But, in an interview with AFP, he urged his "frugal" colleagues from the Netherlands, Austria, Denmark and Sweden to agree to provide grants -- rather than loans -- to their struggling southern neighbours.

EU officials have drawn up a stimulus plan that would see 500 billion euros ($569 billion) handed out as grants and subsidies and a further 250 billion as loans.

The Frugal Four would prefer the package to be wholly or mainly loans, and for these to come with stern conditions attached, requiring the likes of Italy and Spain to commit to tough reforms with intrusive EU oversight.

On the eve of the summit, the liberal leader of small but wealthy Luxembourg, urged both sides to "put a bit of water in their wine" to find what still seems an unlikely compromise.

- 'Few easy summits' -

On loans versus grants, Bettel said: "They should complement each other."

"What's the point of asking a country that we know very well will not be able to repay to take loans? It's ridiculous. So we must also know how to give," he argued.

"Because today I am giving, but maybe after tomorrow I will be the one who will receive something."

Bettel predicted there would be other clashes, for example over demands for deeper rebates on EU contributions and Brussels' bid to make spending contingent on member states' commitment to the rule of law.

But he said compromise must be possible.

"I know that there are issues that make people angry: There are rebates, there is the rule of law, and there are reforms, some of them structural, that should take place," he said.

"I've had few easy summits, in the last few years we've had a lot of difficult discussions, but in the end, we're always finding compromises.

"We know very well that if we have other countries falling, it drags Europe down, so it is important to support each other."

And what is the subject that could make Bettel angry?

Well, on Friday he may upbraid his neighbours about renewed border controls on his landlocked Grand Duchy, which relies more than most on European free movement of goods and people.

Luxembourg has recently seen a small uptick in coronavirus cases, and neighbours like Belgium and Germany are concerned, restricting some non-essential cross-border traffic.

- Honest accounting? -

But Bettel says his country's high caseload is a side effect of an aggressive testing program.

"The WHO and the ECDC (European Centre for Disease Prevention and Control, editor's note) tell us: 'test, test, test'," he said.

"That's what we're doing. We're testing 20 times more than France, 20 times more than Belgium, more than 10 times more than Germany, because we decided that testing would make it possible to stop people from infecting each other more quickly.

"We test more than 10,000 people a day. I have a mortality rate that's one of the lowest. I prefer to test. I prefer to know my figure.

"And today if we are being punished because we are honest, because we are transparent, because we are far-sighted, that is not the spirit of solidarity that I expect from my colleagues and I will say so tomorrow without any problem."

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