Friday, April 3, 2020

Angela Merkel says no to corona bonds

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Video conferencing does not prevent stormy atmospheres. Tensions were felt this Thursday at the European summit which was held by a screen. Germany excluding debt pooling, Italy had to threaten to slam the door to obtain that the 27 of the European Union examine within two weeks stronger measures to face the recession announced with the epidemic of coronavirus .

Angela Merkel began by reaffirming her opposition to the idea of ​​issuing “corona bonds”. To respond to the crisis linked to the coronavirus pandemic, Emmanuel Macron and 8 other European leaders had launched an appeal for.

“We have said on the German side, but also on the part of other participants, that it was not the conception of all the member states” to issue these joint European loans to support the economy, underlined the German Chancellor after a summit by videoconference.

Angela Merkel reaffirmed her “preference for the MES”, the European Stability Mechanism which is the emergency fund in the event of a crisis in the euro zone. To a large European shared loan, the Chancellor prefers the MES which can lay down strict conditions in exchange for its loans to countries in crisis, such as for example reforms difficult to make or savings to be made. What Rome does not want.

The threat from Italy

In a letter addressed to the President of the European Council Charles Michel on Wednesday, the leaders of nine European countries, including Emmanuel Macron and the Italian Giuseppe Conte, had called for the creation of “corona bonds” in order to have significant funds in the face of the crisis exceptional sanitation that shakes the EU.

Pooling the debts of European countries is frequently requested by particularly indebted countries in southern Europe, such as Italy, but it is rejected by the northern countries. The latter, like Germany and the Netherlands, more virtuous in budgetary matters, have always observed with distrust the southern states, which they consider more lax, especially since the debt crisis in the euro zone.

The EU 27, however, agreed, under pressure from Italy, where the pandemic caused by the new coronavirus caused the most deaths, to examine within two weeks stronger measures to deal with the announced recession .

“We fully recognize the seriousness of the socio-economic consequences of the COVID-19 crisis and we will do everything necessary to meet this challenge in a spirit of solidarity,” they said in a joint statement.

During this laborious summit, Rome threatened to refuse to endorse the joint declaration if this request was not taken into account.

European leaders have asked the Eurogroup, the body of finance ministers of countries that have adopted the single currency, to “present proposals within two weeks” to allow “to strengthen the response with new actions […] in the light of developments, in order to provide a global response ”.

These new proposals were imposed by Italy and Spain, who demanded a “strong and adequate” economic response from the 27.

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