EU finance ministers’ talks drag into night as Covid-19 deal eludes
Efforts by European Union finance ministers to strike a deal on a package of coronavirus-related fiscal measures were dragging into the night on Tuesday, amid deep differences over the need for a joint debt issuance tool, such as so-called coronabonds.
“Work towards an ambitious EU economic policy response to Covid-19 is well on track but not there yet,” Luis Rego, the spokesman for Eurogroup President Mario Centeno, wrote on Twitter.
“Press conference moved to 10 am (0800 GMT),” he added.
The talks had started with an hour’s delay at 4 pm but were then interrupted for several hours in an effort to find a compromise, EU diplomats reported.
On the table is a “safety net” worth half a trillion euros (540 billion dollars), according to Centeno, who heads the Eurogroup of eurozone finance ministers.
The senior official believes there is a broad consensus for a trio of measures, though EU debt was proving to be a tough one to agree on.
The most controversial question underpinning the ministers’ talks is whether jointly issued EU debt – for example the so-called coronabonds – is necessary to overcome the major economic contraction anticipated across the bloc this year.
Some southern EU countries, notably Italy and Spain, are demanding this. France has proposed setting up a fund for bonds, which would be temporary, with a finite size and dedicated to the coronavirus crisis alone.
However, Germany, the Netherlands, Austria and Finland have rejected calls for coronabonds.
Also under consideration is a precautionary credit line from the European Stability Mechanism (ESM), the eurozone’s bailout fund, in case individual countries experience difficulties raising funds to deal with the fallout from the pandemic on financial markets.
Ministers were also discussing a guarantee fund from the European Investment Bank for business liquidity, as well as EU support to pay the wages of workers who would otherwise be laid off by struggling firms.
Combined, these three measures would give the “clear sign of solidarity that is now needed in Europe,” German Finance Minister Olaf Scholz said ahead of Tuesday’s talks, while noting that their task was not easy.
The issue threatens to torpedo any chance at an agreement on Tuesday, with southern states reluctant to approve the use of the ESM for fear that it would stigmatize them and come with tough conditions, as well as concerns that it would kick joint debt issuance further down the road.
The ESM is “absolutely inadequate” as a response to the crisis, Italian Prime Minister Giuseppe Conte said in a press conference late on Monday. “ESM no, eurobonds certainly yes,” he added.
In Italy, the neo-Fascist Casa Pound party said it was ready to protest outside parliament – in breach of lockdown rules – if the ESM were accepted as part of the solution at Tuesday’s talks. The party represents the extreme fringe of widespread Italian opposition to the bailout fund.
Scholz stressed that the aim was not to push through economic restructuring programmes. “This is concretely and exclusively about providing help where it is now needed,” he said.
Before the added pressure of the coronavirus crisis, Italy had already been in Brussels’ cross-hairs for having one of the world’s highest levels of public debt.
Read also: World Health Day: NHRC commends Health workers
Meanwhile, European Commission Vice President Margrethe Vestager urged member states to throw taboos overboard, in an interview with the German media group Redaktionsnetzwerk Deutschland published on Tuesday.
“In the current situation, we have to use all available instruments, without exception,” the EU’s top competition official said. “There can be no taboos. We need solutions.”
Many see the division over coronabonds, which echoes the debate during the eurocrisis, as a more fundamental schism between different European value systems. (dpa)
