In order to cope with the economic consequences of the coronavirus crisis, the EU states want to develop a new model for a common rescue package within two weeks. This is the result of an EU video summit with Chancellor Angela Merkel and the other heads of state and government on Thursday evening. The agreement had been hard fought because Italy vetoed a previously negotiated compromise formula and called for a stronger response from the European Union to the unprecedented crisis.
Merkel said after the summit that the EU has committed to solidarity. “We are determined to face this challenge together,” said the Chancellor.
The joint summit declaration said at the end that the Eurogroup should come up with a new proposal for common fiscal measures within two weeks: “These proposals should take into account the unprecedented nature of the Covid 19 shock, which affects all our countries.” The international community therefore expressly reserves the right to take further joint steps.
Charles Michel in Brussels: The President of the European Council participates in one of the video summits on Thursday. (Source: dpa)
Merkel: ESM is the preferred instrument
The Eurogroup was originally supposed to be commissioned to develop details for aid from the ESM Eurorescue umbrella. There was talk of an instrument for “pandemic crisis support”. This meant precautionary credit lines from the ESM. The credit lines would be available to states that could face difficulties due to the enormous support packages for the domestic economy. The ESM has around 410 billion euros available for loans.
Merkel said that the ESM would be her preferred instrument, especially since it was created for times of crisis: “I believe that with the ESM we have a crisis instrument that opens up many opportunities for us.” It does not question the basic principles of “acting together, but then again responsible”.
Italy’s head of government calls for a compromise
This proposal was not enough for Italy’s Prime Minister Giuseppe Conte. Together with Spain, Conte called for “innovative and appropriate financial instruments” at the video summit, according to Italian government circles. This ultimately led to the compromise that the Eurogroup should make proposals within two weeks.
With around 7,500 corona deaths, Italy is not only the EU country hit hardest by the epidemic. After Greece, with a mountain of debt of over 130 percent of its economic output, it also has the least financial leeway to react to the economic downturn as a result of the Corona crisis.
According to government officials at the summit, Conte made it clear that he did not want public debt to be communitized. Each country is responsible for its own debts and will continue to do so. But Europe must act together and find a strong answer to the crisis.
In a late evening press conference, EU Council leader Charles Michel said that all options for responding to the crisis had been debated. “We are doing everything necessary to find a solution,” said the councilor. On many questions, one was entirely in agreement. EU Commission chief Ursula von der Leyen said that they were open to “discussing all other options that could be on the table”.
Von der Leyen criticizes national solo efforts
A group of nine EU countries – including Italy – had previously called for a common debt instrument known as corona bonds. Germany, however, is strictly against it, as Merkel affirmed, some other states as well. The debate on this is likely to continue.
Before the summit, von der Leyen had been heavily criticized for going it alone in the crisis, including unilateral export bans, border controls and disruptions to the internal market in Europe. “When Europe really had to be there for one another, too many initially thought only of themselves,” said von der Leyen in a special session of the European Parliament. In the meantime, the states have started to help each other. “Europe is back,” said von der Leyen.
In their summit declaration, the 27 states assured that the problems for the movement of goods at the partially closed borders would be resolved. Together, the procurement of protective equipment is to be promoted and research on vaccines against Covid-19 is to be promoted. The entry ban for non-EU citizens that was imposed jointly for 30 days last week could be extended. At the same time, the heads of state and government ask the EU Commission to start working on an exit strategy to normalize the situation.