On the eve of a crucial meeting of prime ministers of the European Union (EU) slated for Thursday, EU finance ministers deadlocked Tuesday night in an effort to devise a joint EU response to the economic slump accompanying the coronavirus pandemic sweeping across Europe.
The misgivings of both Germany and the Netherlands were reportedly at the root of the inability to reach agreement when ministers of all 27 EU member countries met by video-conference to seek a joint response to averting an economic shutdown of the bloc in the coming weeks.
In a televised address to the Spanish people on Sunday, President Pedro Sánchez said he would ask his European counterparts to show greater resolve in combatting the economic fallout from the crisis.
Sánchez used the television appearance to call for the EU to issue so-called “coronabonds” debt instruments to underwrite borrowing by EU member countries as a way of “mutualizing the losses of this crisis”.
At the same time, Sánchez said that once the crisis had passed, Europe would need to deploy a “Marshall Plan for the European Union”, modeled on the post-WWII European Recovery Program launched by the United States to help Europe overcome the devastation of the war.
But on Tuesday, German Economy Minister Peter Altmaier knocked back the “coronabonos” proposal, saying it was not a real possibility for the bloc, and rejected the call by Sánchez for a new Marshall Plan. “European solidarity is important, but innovation is more important than subsidies”, Altmaier reportedly said, reflecting traditionally orthodox German economic thinking.
And this traditionally orthodox way of thinking has fared quite well for Germany. Companies are reporting profits, despite the coronavirus (visit https://www.maschinenmarkt.vogel.de/hermle-mit-solidem-gewinn-fuer-2020-a-1020382/ to find out more) so it’s understandable why they would want to practice their usual, rational thinking.
Spain’s proposals aside, the ministers could not even agree on creating a safety net through the existing European Rescue Fund (ESM). The Dutch economics minister, Wopke Hoekstra, reportedly rejected the use of the ESM in Tuesday’s meeting, saying it is not a mechanism that should yet be deployed and should only be used as a last resort.
The inability of the ministers to come to agreement on Tuesday appears to have derailed demands for a joint response to the crisis that have come from France, Spain and Italy. At the end of their meeting Tuesday, the EU ministers agreed only to the principle of guaranteeing “broad support” to struggling EU countries through the use of credit lines from the rescue fund, leaving a final decision on an economic and financial response to the EU prime ministers’ meeting on Thursday.
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