BRUSSELS (Pakistan Point News / Sputnik - 28th March, 2020) The special videoconference of the EU countries' leaders on COVID-19 took place on Thursday followed by a press conference by Charles Michel, the president of the European Council, and Ursula von der Leyen, the president of the European Commission. The latter was delayed for more than 4 hours, which indicates the seriousness of the crisis and the different positions within the EU.
The crisis is, above all, on the health front and involves issues such as limiting the spread of the pandemic, boosting vaccine research, guaranteeing food procurement in supermarkets and producing more medical equipment, like respirators. However, it also has an economic dimension, as the economies of the member states have slowed down quickly.�
As Charles Michel said, starting his press conference, the circumstances are extraordinary, as the European Union is now the epicenter of the pandemic, with more deaths than China has had since December, when the COVID-19 outbreak erupted in Wuhan and the Hubei province.
Michel listed the 5 priorities of the EU, which were discussed at length: continuing to prevent the spread of the virus and reinforcing the healthcare systems, shutting down the external and internal borders and drastically lowering non-essential travels, manufacturing more medical equipment and guaranteeing the distribution of provisions, pushing the research and development of vaccines and treatments, avoiding an economic downturn, and helping bring back EU citizens stranded across the globe. He also acknowledged a very strong political debate among heads of state on the economic and financial measures to be taken, especially over the so-called coronabonds.
Von der Leyen, on her part, spoke of coordination and alignment between member states and European institutions, mobilizing the EU budget to give all the possible room of maneuver to the member states. Strangely referring to Charles Michel as "Jean-Michel" twice � probably due to being tired � she stressed that the EU is in the final year of its 7-year budget and will do all it can to push the corona investment initiative, knowing that the 'escape clause' of state aid is applicable to each member state, which frees member states from European funding rules.
Prior to the summit, France, Italy, Spain and six other euro-area governments sent a joint letter calling for the issuance of a joint European debt in "coronabonds" to finance the fight against coronavirus, creating a clash with other players, including Berlin, which say such measures are premature.
The joint letter said that the EU needed "to work on a common debt instrument issued by a European institution to raise funds on the market on the same basis and to the benefits of all Member States, thus ensuring stable long term financing for the policies required to counter the damages caused by this pandemic."
The letter landed on Charles Michel's desk on Wednesday, the day before the videoconference of EU leaders was supposed to galvanize the next stage of EU response to the crisis.
But the push for coronabonds seemed to have deepened the rift between countries over how far and how fast the EU should harness common fiscal solutions to tackle the economic destruction unleashed by COVID-19.
According to a source present during the conference, the Netherlands took the lead in blocking the decision to create coronabonds. Germany went along, deeming it to be too early to go to such extreme measures. The measures that have already been taken, such as the suppression of the limit of 3 percent of the deficit in the annual budget, which enables countries to spend freely, should be sufficient, according to Berlin. Germany actually fears an unwelcome strain on the euro by the Mediterranean countries that have great difficulties respecting the Maastricht criteria.
The idea of joint Eurobonds is anathema to orthodox financial experts because it mutualizes debt issuance by Eurozone governments, which could destroy the monetary union.
The German minister of the economy, Peter Altmaier, flatly refused any discussion on coronabonds, declaring to Handelsblatt, a German daily, "I urge caution when supposedly new, ingenious concepts are presented which often enough are just long discarded ideas coming back from the dead."
The European Union member states will have to make do for now with the tools they have, even if French President Emmanuel Macron, Italian Prime Minister Giuseppe Conte and Spanish Prime Minister Pedro Sanchez have argued that the pandemic is a shock that is affecting all countries, including Germany and the Netherlands.
Whether their partners will be swayed by such arguments remains to be seen, but the issue is likely to stay in the conversation as the eurozone finance ministers conjure up a strategy to deal with the economic consequences of the COVID-19 pandemic.
