EU chief apologises to Italy but baulks at ‘coronabond’ request



Issued on: Modified:

European Commission chief Ursula von der Leyen told Italy Thursday that European nations were ready to help it deal with the coronavirus, but stopped short of agreeing to Rome’s request for the bloc to start issuing a joint mutualised bond, dubbed “coronabonds”.

“Today Europe is mobilising alongside Italy. Unfortunately, this has not always been the case,” von der Leyen wrote in Italy’s La Repubblica newspaper.

“It must be recognised that in the early days of the crisis, in the face of the need for a common European response, too many have thought only of their own home problems.”

Von der Leyen’s letter opened with an apology but ended with a list of the ways the EU was already helping Italy deal with the economic consequences of its three-week lockdown.

Italy has extended its closure of businesses and ban on public gatherings until April 13 to help stem infections that have already claimed a world-leading 13,155 lives.

“In the past month, the European Commission has left no stone unturned to help Italy,” she wrote.

But the German politician predictably made no mention of a mutualised asset, or “coronabonds” to share some of the direct fiscal costs from the coronavirus pandemic.

Spain and France – two nations with rapidly climbing covid-19 tolls – have backed Italy’s plea for the new common debt instrument.

But Germany, Austria and the Netherlands oppose the idea.

Common debt instruments can theoretically dilute risk and lower the borrowing costs of indebted countries while slightly raising those of nations spending within their means.

READ  Kaiser's descendant loses court battle to regain 13th-century castle

Loan guarantees

Von der Leyen on Thursday said the EU “will allocate up to 100 billion euros ($110 billion) to the hardest hit countries, starting from Italy, to compensate for the reduction in the wages of those working on shorter hours”.

She said the newly agreed initiative provides “loans guaranteed by all member states – thus demonstrating European solidarity”.

Von der Leyen concluded by proposing that “every euro still available in the EU’s annual budget be spent on tackling the crisis”.

‘If we are a union, now is the time to prove it’

Italian Prime Minister Giuseppe Conte said this week that Italy could agree to tap the European Union’s emergency war chest, the EMS, if its strict spending rules were dropped.

“If we are a union, now is the time to prove it,” Conte wrote in Germany’s weekly Die Zeit.

French Finance Minister Bruno Le Maire meanwhile said the EU should mobilise all of its existing crisis measures in response to the coronavirus outbreak and come up with new joint mechanisms to finance the recovery.

The European Stability Mechanism, the bailout fund with 400 billion euros ($436.8 billion) in firepower, should be made available as a source of financing to countries with only minimal conditions attached and without stigma for using it, Le Maire told an online news briefing Thursday.

(FRANCE 24 with AFP and REUTERS)



READ SOURCE

LEAVE A REPLY

Please enter your comment!
Please enter your name here