European Union in disagreement over coronavirus finance deal
by Karen Faulkner, Worthy News Correspondent
(Worthy News) – A disagreement over eurozone loans on Wednesday halted European Union (EU) efforts to agree on a deal on managing the economic fallout of the coronavirus pandemic. Negotiations between European finance ministers were suspended until Thursday after 16 hours of talks brought no resolution. Yesterday’s discussions followed similar talks that were held last month, when no agreement was reached either.
Regarding yesterday’s talks, Eurogroup chief Mario Centeno said in a tweet: “We came close to a deal but we are not there yet. My goal remains: A strong EU safety net against fallout of COVID-19 … and commitment to a sizeable recovery plan.”
A key obstacle to a deal is a disagreement between Italy and Spain in the poorer south of the eurozone and Germany and Holland in the fiscally conservative north. DW reports that the southern nations support efforts to collectively guarantee debt in the form of ‘coronabonds,’ a measure that could raise hundreds of billions of euros. This option has been vigorously rejected by the Germans and the Dutch. For their part, Holland and Germany suggested extending credit to countries in need through an existing crisis tool called the European Stability Mechanism (ESM).
An issue with the German/Dutch suggestion is that the ESM requires hard commitments to economic reform in exchange for credit. Although the German government has said these commitments could be eased, it is not known to what extent they would be. According to a France 24 news channel report, Italy said credit should be given free of any financial reform requirement but Holland refused to consider this as an option.
In a statement, German Finance Minister Olaf Scholz said: “Together with French Finance Minister Bruno Le Maire, I call on all eurozone countries not to refuse to solve these difficult financial questions and to enable a good compromise for all citizens.” Negotiations resume Thursday.
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