European finance ministers still failed to agree on Wednesday morning, after a full night of discussions, on a common economic response to the coronavirus, the countries of the North remaining opposed to those of the South, who are calling for an unprecedented financial effort.
The videoconference, which started around 4.30 p.m. (2.30 p.m. GMT) on Tuesday, continued throughout the night, during which discussions in small groups multiplied in an attempt to break the deadlock.
“All I can say is that there is no agreement at the moment. But I don’t take it for granted that there will be an agreement“, summarized a European source in the early morning.
Whatever the outcome of the meeting, a press conference is announced Wednesday at 10 a.m. (8 a.m. GMT).
Faced with the pandemic, the European response in the short and medium term must focus on three main axes, which initially seemed to win the support of ministers: up to 240 billion euros in loans from the euro zone relief fund , a guarantee fund for businesses and support for partial unemployment.
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“Clear commitment”
But the countries most affected by the virus, especially Italy, continue to demand, in addition, the creation of a common debt instrument – in the form of Eurobonds sometimes called “coronabond” or “eurobonds“- intended to revive the economy in the long term once the crisis is over.
Among these countries are also Spain and France, as well as Greece, Malta, Luxembourg or Ireland, according to concordant sources.
“Eurobonds represent a serious and appropriate response“, Italian government chief Giuseppe Conte insisted on Monday evening, whose country is the most affected in Europe (more than 17,127 dead).
Italy, faced with the opposition of the countries of Northern Europe (Germany and the Netherlands in the lead), had already, with Madrid, led to the failure of the summit devoted to the Union’s response in late March.
Debt pooling constitutes a red line for Berlin and The Hague, which refuse to engage in a joint loan with highly indebted states of the South, which they consider lax in their management.
Denmark, Austria, Sweden and the Baltic countries are on their side, said a European source.
Just before the meeting, the president of the Eurogroup, Mario Centeno, called the ministers “to make a clear commitment to a coordinated and far-reaching recovery plan“after the epidemic, without going so far as to evoke the idea of a common debt.
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France hoped to offer a compromise, by proposing a “stimulus fund“capable of issuing common debt to member states, but limited to essential public services, such as health, or endangered industries.
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“Unsuitable”
Rather than debate on a hypothetical common financing, the countries of the North prefer for the moment to focus on the already existing instruments to counter the economic shock, in particular the European Stability Mechanism (ESM), created in 2012 during the crisis of eurozone debt.
The MES could grant loans to a State in difficulty of up to 2% of its GDP – or up to 240 billion euros for the whole of the euro zone -, with more limited counterparts than those required until now. the.
Rome, which rejects the slightest conditionality to the granting of these loans, however judges this fund “unsuitable“, M. Conte summing up his position in a clear manner:”MES no, eurobond yes“.
The European Investment Bank (EIB) should also be in the driver’s seat, via a pan-European guarantee fund, endowed with 25 billion euros, which would make it possible to mobilize up to an additional 200 billion euros for businesses.
Finally, the ministers must also validate the project of the European Commission aiming to create an instrument to guarantee up to 100 billion euros at the most national plans of partial unemployment, reinforced or created because of the epidemic.
If an agreement is reached, the ministers’ proposals will still have to be approved by the heads of state and government.
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