Published on : 04/09/2020 – 23:05Modified : 04/09/2020 – 23:05
–
The European Union countries finally reached agreement on Thursday on a common economic response to the coronavirus. The French Minister of Economy and Finance, Bruno Le Maire, welcomed an “excellent agreement”, which includes a support plan of around 500 billion euros. However, the text does not mention the creation of “coronabonds”.
European finance ministers reached agreement on Thursday April 9 on a joint economic response to the coronavirus pandemic. The 27 have found common ground with the Netherlands, which has blocked talks since Tuesday.
This vast plan would bring all the measures adopted by the European Union to combat the effects of the pandemic to 3,200 billion euros, the largest in the world. “The meeting ended with the applause of the ministers”, announced on Twitter the spokesman for the president of the Eurogroup Mario Centeno. “Today, we have responded to our citizens’ call for a Europe that protects” with “bold proposals that seemed impossible just a few weeks ago,” he said.
FR NW SOT EUROGROUPE 1 00H
–
French Finance Minister Bruno Le Maire welcomed an “excellent agreement” including “500 billion euros available immediately” and “a stimulus fund to come”.
Excellent agreement between European finance ministers on the economic response to #Coronavirus : 500 billion euros available immediately. A stimulus fund to come. Europe decides and stands up to the severity of the crisis.
– Bruno Le Maire (@BrunoLeMaire) April 9, 2020
–
Bruno Le Maire told journalists a little later that Europe had concluded the most important economic plan in its history. “Everyone had in mind that it was either an agreement or the risk of a European dislocation,” he said. “It is an effective plan, it is a massive plan,” he continued.
German Finance Minister Olaf Scholz greeted him “a great day for European solidarity”. “It is important that we all provide a common response that enables our states to overcome the health challenges as well as the economic challenges” created by the Covid-19 pandemic, said the minister.
Italy, the European country most affected by the pandemic with more than 18,000 dead, also welcomed the agreement through the voice of its Minister of Economy Roberto Gualtieri. He praised in a tweet “an ambitious proposal”, adding that his country “would fight to make it happen”.
Three main axes
Faced with the pandemic, the European response must focus on three main areas: up to 240 billion euros in loans from the European Stability Mechanism (ESM, the euro zone relief fund), a guarantee fund for 200 billion euros for companies and up to 100 billion to support short-time working.
The heads of state and government, who themselves had failed to reach an agreement at a summit on March 26, will still have to validate these proposals.
The burning question of unresolved “coronabonds”
The burning issue of “coronabonds”, intended to support the economy in the longer term after the crisis, considered less urgent, was not resolved on Thursday.
The countries most affected by the virus, in particular Italy, are calling for the creation of a stimulus “fund” which can be financed by common debt, in the form of eurobonds sometimes called “coronabonds” or “eurobonds”. However, the pooling of debts constitutes a red line for Berlin and The Hague, which refuse to be part of a common approach with the highly indebted States of the South, considered lax in their management.
While Bruno Le Maire said Thursday that the agreement paves the way for joint debt, his Dutch counterpart Wopke Hoekstra stressed the opposite. “We are and will remain opposed to ‘coronabonds’. This concept will not help Europe or the Netherlands in the long term,” said the Dutch Minister for the Economy after the talks.
The final text mentions a “stimulus fund” whose “legal and practical aspects”, in particular “financing”, will still have to be defined.
Relief
This consensus is a relief for Europeans who manage to display unity in the face of the disastrous economic consequences of the virus, after weeks of procrastination highlighting a divide between the countries of the North and those of the South.
A unitary response was all the more essential since the European economy is heading towards a deep recession in 2020, the International Monetary Fund even believing that the coronavirus could cause worldwide “the worst economic consequences since the Great Depression” of 1929.
Wednesday morning, after sixteen hours of sterile discussions, The Hague had been unanimously criticized for its inflexibility, a blockage qualified by Paris as “counterproductive” and “incomprehensible”. Member States criticized the Netherlands (supported, according to a European source, by Austria, Sweden and Denmark) for blocking the activation of the European Stability Mechanism (ESM), by strictly conditioning the loans that could be granted by this euro zone relief fund for economic reforms.
Such “conditionality”, which would go back to the time when Greece was forced to implement sometimes painful reforms in exchange for new money, would have been experienced as a humiliation by Italy and Spain, both European countries currently most affected by the epidemic.
Created in 2012 during the debt crisis and financed by the Member States, the ESM could lend to the States up to 2% of their GDP, or up to 240 billion euros for the whole of the euro zone.
With AFP and Reuters
– .
