Sunday

26th Sep 2021

Agenda

Coronabonds clash continues This WEEK

  • Eurogroup president Mario Centeno will have to hammer out a compromise between member states (Photo: Council of the EU)

As Europe heads towards Easter under lockdown, eurozone finance ministers will get together online on Tuesday (7 April) to draw up proposals on how to deal with the economic shock stemming from the coronavirus pandemic.

The outbreak has reopened wounds that had never been fully healed after the debt crisis almost a decade ago.

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Southern members, such as Italy, France, and Spain, are calling for a new Marshall Plan, referring to the US financed program to rebuilt western Europe after the Second World War.

They also want the eurozone to issue a joint debt instrument, the so-called coronabond to finance the shock of the pandemic.

Over the weekend, Spanish prime minister Pedro Sanchez told German newspaper Frankfurter Allgemeine Zeitung that Europe needed debt mutualisation and a common Marshall Plan to recover from the coronavirus pandemic.

"If the virus doesn't stop at borders, then financing mechanisms cannot do so either," he said.

But Nordic members, led by the Netherlands and Germany, are reluctant to jointly issue debt, fearing it would make their southern partners less disciplined in their finances.

They worry that it would make the weaker southern member states loosen up on their finances, while exposing them to increased debt - eventually guaranteed by the Nordic states' financial discipline.

Ministers have received no political guidance on this deeply divisive issue from EU leaders, but are expected to draw up plans.

The sour and heated tone of the debate over coronabonds have recalled worries from the debt crisis that the eurozone might break apart.

Finance ministers will also be discussing how to use the EU's rescue fund, the European Stability Mechanism (ESM) with a €410bn firepower, to mitigate the economic fallout.

The ESM could offer up to €240bn to help member countries hit badly by the coronavirus outbreak, eurogroup president, Mario Centeno, who is also Portugal's finance minister, said in an interview over the weekend.

He said any credit line should be designed to help, not make matters worse for those states needing aid, referring to the austerity conditions attached to any previous EU loans.

"There would be no sense in linking a pandemic crisis to a programme of (say) privatisation or reform of the labour market," Centeno told French daily Le Figaro, AFP reported.

He conceded that there would be some "form of conditionality, but the ESM is ready to dissociate its credit lines from the logic of the sovereign debt crisis."

EU commission president Ursula von der Leyen has also called for a Marshall Plan under the EU's long-term budget that needs to be agreed this year.

Over the weekend in guest article for the paper Welt am Sonntag, she called on EU nations to invest billions in the bloc's budget to avert catastrophic economic consequences from the current coronavirus crisis.

Ahead of the eurogroup meeting, von der Leyen will hold a videoconference call with EU council president Charles Michel on Monday (6 April).

Other business

On Tuesday, migration commissioner Ylva Johansson will hold an informal justice and home affairs ministers' videoconference.

On Monday, foreign affairs and defence minsters will discuss defence issues online.

Justice commissioner Didier Reynders takes part on Wednesday (8 April) in a online talk on the rule of law and the future of Europe, organised by the Brussels-based Centre for European Policy Studies (CEPS) think tank.

Last week, Reynders called for member states not to sacrifice rule of law in their fight against the coronavirus, and said the EU executive would particularly pay attention to Hungary, where PM Viktor Orban was granted sweeping powers.

Health commissioner Stella Kyriakides will hold a videoconference call with representatives of the pharmaceutical and medical device industries on Wednesday.

EU leaders at odds on virus-hit economy

Italy, with the backing of France and Spain, call for substantial EU economic help, others want to see how long the outbreak will last before committing to big plans.

Opinion

A coronavirus 'Marshall Plan' alone won't be nearly enough

The 1948-51Marshall Plan provided about €118bn in today's figures in American assistance to European countries. These numbers are dwarfed by prospective needs, and the needs are not just European or American - but global.

Opinion

Coronavirus sees approval-rating soar for EU leaders

The rise in support for mainstream parties has been paired with stagnation or decline for far-right populist parties and figures - the AfD has dropped to 10 percent in Germany and Marine Le Pen and Matteo Salvini are treading water.

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