In search
of solidarity
By Mehreen
Khan
March 26,
2020
When EU27
leaders dial-in for their latest teleconference summit this afternoon, a newly
formed alliance of nine member states will be making their digital presence
felt.
The
constellation — call them the “No Limits Nine” — have written to European Council
president Charles Michel calling for the creation of a common debt instrument
to fight the devastating impact the coronavirus crisis is threatening to wreak
on Europe’s economy.
The nine, a
counterweight to the stubborn Hanseatic League, want a euro bond “to raise
funds on the market on the same basis and to the benefits of all member
states”. They want it to be of “sufficient size” and a “long maturity” to
bankroll mass spending on healthcare and post-corona economic reconstruction.
Among the signatories are usual suspects such as France, Italy and Spain and
relatively new adherents such as Ireland, Slovenia and Luxembourg.
US, Spain
and Italy now account for over half of daily coronavirus cases
The
statement is perhaps the most heavyweight endorsement of a move towards true
fiscal union in the history of the single currency area. But for now, that call
will go unheeded.
Germany and
the Netherlands will serve as the unmoving objects today for the No Limits
Nine’s demands for debt mutualisation. The northern “frugals” are still
allergic to the idea of underwriting borrowing to fund spending in other
countries. They argue that the crisis is in too early a phase to accelerate the
leap into common bond issuance. “It is always nice to have nine leaders write a
letter. But nine is not 27. It is not even a majority,” says a sceptical EU
diplomat.
Faced with
this intransigence, today’s summit conclusions are not expected to include any
mention of coronabonds or even vague references to joint debt instruments.
Emmanuel Macron and his allies such as Spain’s Pedro Sánchez and Portugal’s
António Costa are unlikely to push the buttons of Dutchman Mark Rutte and
Germany’s Angela Merkel. Diplomats do not expect leaders to have a substantial
discussion about the topic for fear of reopening barely-healed wounds in the
midst of an unprecedented pandemic that has taken thousands of lives in Europe.
Council
chief Michel has made his plea, calling on leaders to consider a “Marshall
plan-like stimulus”. A current draft communiqué has the more modest aim for
governments to “decide on further steps, as necessary, in light of
developments”.
The main
tool under consideration is the deployment of credit lines from the eurozone’s
bailout fund. Here again, there is something of a north-south split. France and
its allies want to keep conditions on the cash as light as possible, arguing
that the bloc has been hit by an external symmetric shock and no country should
be treated as if it has mismanaged its public finances. The Dutch insist that
stringent crisis-era conditions should still apply.
Even if
leaders avoid recriminations today, public opinion in some countries risks
turning sour — especially towards the Dutch. Forceful statements from
Netherlands finance minister Wopke Hoekstra about the dangers of fanning moral
hazard have provoked a backlash from southern European commentators and plenty
of economists. Some have gone as far as to highlight the country’s corporate
tax arrangements and other gripes as a stick to beat the Dutch with.
Hoekstra
also infuriated some of his finance minister colleagues this week when he
suggested that Brussels “investigate” why some economies did not have the
fiscal headway to fight a downturn — a veiled dig at Italy and others for
failing to reform in benign times. An EU diplomat quoted by Volkskrant
described the slight as a “middle finger to the south”. The fixation on morality
tales during an indiscriminate and deadly health crisis has done The Hague no
favours.
As for
today, the nine are likely to make their plea for bold financial action as a
call for unity rather than spending. “We want to use this crisis to go a step further
in terms of solidarity,” says an Elysée official. “Now that we have put in
place the firebreaks, the question that will be posed is the question of
European solidarity.”
Michel: EU
leaders to consider ‘Marshall Plan’ for Europe
Next
long-term budget will need to support economic stimulus package, says Council
president.
By MAÏA DE
LA BAUME AND LILI BAYER 3/25/20, 7:06 PM CET Updated 3/25/20, 7:29 PM CET
EU leaders
will on Thursday discuss a “Marshall Plan-like” stimulus package to fight the
dire effects of the coronavirus on the bloc’s economies, European Council
President Charles Michel said Wednesday.
Speaking on
Belgian television channel LN24, Michel said he had earlier this week discussed
“the way we are going to put in place what I call a Marshall Plan-like stimulus
strategy” with the bloc’s 27 ambassadors, ahead of Thursday’s videoconference
of heads of state and government.
“And when I
say Marshall Plan-like, I say with a strong ambition,” he added. The impact of
the economic shock on businesses means “we must be very active, very soon.”
Michel
described the endeavor as “an intra-European plan which must mobilize EU
capital in the framework of the European budget; which must mobilize national
funds and which should also mobilize the private sector,” adding: “We will have
to use all the tools.”
Leaders on
Thursday are expected to call on the European Commission to put together a new
plan for economic recovery.
In a draft
statement prepared ahead of the leaders' discussion and seen by POLITICO,
officials wrote that the bloc would need an “exit strategy, a comprehensive
recovery plan and unprecedented investment” for the coronavirus crisis, and
would “invite the Commission to start work on a proposal for a Roadmap for
recovery accompanied by an Action Plan.”
Michel
said: “We should not expect a sprint, this crisis is going to have an impact on
us at short, medium and long term."
Prior to
the virus hitting Europe, the Council president was focused on brokering a deal
in negotiations over the bloc’s 2021-2027 budget.
“I believe the crisis we are going through now
has an impact” on the EU budget negotiations, Michel said, adding that the
budget should draw on the “lessons” of the crisis and especially the ability to
“assert solidarity and to have with that budget a real instrument to support
our priorities for the economic stimulus plan.”
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