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5th Jun 2020

Coronavirus

'All options on table', says EU commission on coronabonds

  • The virus has so far hit Italy and Spain harder than any other EU state (Photo: Nacho Rascón)

The European Commission has not dismissed outright a stalled proposal to ease the economic fallout of the coronavirus on southern EU states.

On Monday (30 March), the European Commission's chief spokesperson Eric Mamer said "all options are on the table" - and that the future seven-year EU budget is being revised to reflect the new reality given the pandemic.

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The plan, pushed by Rome last week and backed by eight other EU states, demanded the creation of so-called 'coronabonds' to raise capital for national coffers but was quickly shot down by fiscal hawks in the Netherlands and Germany.

The feud escalated over the weekend when European Commission president Ursula von der Leyen appeared to side with the Netherlands and Germany in an interview with German media outlet DPA.

Von der Leyen seemingly described the coronabond as a "slogan" - prompting further demands by Italy's finance minister Roberto Gualtieri for immediate clarifications on the commission's position.

"She used the German word 'schlagwort' - this has been interpreted by some as being a 'slogan' but what it actually means is a 'concept', a 'key word' and therefore it does not have in anyway a negative connotation," Mamer told reporters in Brussels via video-conference.

Mamer's comments follow a statement, also issued by the commission on Saturday, attempting to provide further clarification.

It too noted that Von der Leyen "is not excluding any option", in a move that has since been welcomed by Gualtieri.

It also referred to the EU's long term budgetary plans, the so-called "multi-annual financial framework". The commission is revising its initial proposal.

No date has been fixed when it goes public but Mamer said the European Green Deal and digitalisation will remain key policy priorities in the post-pandemic recovery.

Mortal danger and tulips

Meanwhile, the coronabond fallout continues to simmer, in what former European commission president Jacques Delors has described as a "mortal danger" for the European project.

"The climate that seems to prevail among the heads of state and government and the lack of European solidarity represents a moral hazard to the community club," he said, in a statement sent to Agence France-Presse.

The row primarily focuses on Dutch finance minister Wopke Hoekstra, who accused southern EU states of fiscal profligacy and irresponsible spending in their demands to create coronabonds.

The bonds, also known as a collective debt instrument, seek to soften the blow of the pandemic in countries with heavy debt like Italy and Spain where the virus has so far killed more people than anywhere else.

Italy's death toll climbed to 10,779 on Sunday, followed by Spain at 7,340.

Hoekstra said Spain's lack of budgetary margin to deal with the pandemic should lead to an investigation, in remarks widely panned by critics.

But his stance also comes amid Dutch government demands for EU help to save its flower, fruit tree, and potted plant industry.

The Dutch market has already plummeted by some 80 percent since the outbreak, highlighting what some critics say is a double jeopardy given the Dutch government's intransigence on coronabonds.

"The Netherlands must understand: if a major crisis is to happen, to whom are they going to sell tulips to?," said Italy's former European Commission president, Romano Prodi.

Former Dutch National Bank president Nout Wellink shared similar remarks, noting that "if the whole south collapses the rich north ceases to exist."

Criticisms of the Dutch government position were also tweeted by Rob Jetten who leads the liberal D66 party in the Netherlands.

"The Netherlands have become rich through the EU. Now that in entire Europe jobs and salaries are at risk due to the coronacrisis we can not let down our friends. Only together we can get out of this," he wrote, while sharing on Twitter an interview with Dutch National Bank president Klaas Knot.

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