Coronavirus could mean the end of the EU if countries do not agree to share debt for rescue packages
Coronavirus could spell the end of the EU’s “European project” if member states are unable to agree on rescue package debt sharing, the block’s economic commissioner has warned.
Paolo Gentiloni, a former Prime Minister of Italy, said it was vital for Germany, the most powerful member of the bloc, to reach an agreement on debt with states most affected.
He told the Italian radio station Radio Capital: “The European project is in danger of dying out.”
Coronavirus Could End The EU’s ‘European Project’ If Member States Can’t Agree To Share Rescue Package Debts, Block Economic Commissioner Paolo Gentiloni Has Warned
“Obviously, as the economic disparities between European countries, instead of narrowing in a crisis like this, increase instead … it will be very difficult to keep the European project together,” he warned.
Without Germany, he added, “we cannot find a compromise.”
Germany and other northern EU countries on Thursday rejected a proposal from nine countries, including Italy, Spain and France, for so-called ‘corona bonds’.
These would be issued in the name of the euro area as a whole and would in fact result in pooled debt between Member States sharing the single currency zone.
Mr. Gentiloni said he expected Germany’s response and called it a “long-standing vision we know by heart.”
Germany has repeatedly rejected the idea of European or shared European debt.
Mr Gentiloni, a former Prime Minister of Italy, said it is essential that Germany, the most powerful member of the bloc, reach an agreement on debt with the hardest hit states. In the photo: German leader Angela Merkel
The country claims it is an attempt to overspend the southern states to take advantage of the cheap interest rates enjoyed by countries with a balanced budget, without being subject to fiscal austerity measures.
European member states should “start with the common goals” to break the deadlock, Gentiloni said, adding that he acknowledged that no agreement would ever be reached on joint loans.
“We need a new unemployment guarantee tool, a business support plan and we need the ‘Green Deal’ development model in order not to be forgotten,” he said.
He added that one possible way to fund such targets was to issue bonds.
Mr. Gentiloni told the Italian radio station Radio Capital: “The European project is in danger of dying out”
“One is to issue bonds, but not generally to distribute the debt, which will never be accepted,” he admitted.
Gentiloni also said that he was “not very optimistic” about the ongoing discussions about the possible use of the European Stability Mechanism, which provides financial assistance to countries in difficulty.
It normally sets strict tax conditions on its emergency loans.
Some say that the mechanism, launched in 2012 during the European sovereign debt crisis, would unfairly punish highly indebted countries, such as Italy, by imposing new and unattainable conditions for determining public finances.
Germany and other northern EU countries on Thursday rejected a proposal from nine countries, including Italy, Spain and France, for so-called ‘corona bonds’
Comparisons to past crises did not address the challenge of the coronavirus pandemic, suggested Gentiloni, a position also expressed by the Italian Minister for European Affairs.
“It is a new crisis, it cannot be compared to the crisis of 2008, there is no guide, there are no indications that leaders of the past recognize,” Vincenzo Amendola told journalists on Monday.
“When we think about people’s sacrifices, it is a huge, extraordinary novelty with dramatic consequences, and leaders must take on the challenge.”
This map shows the latest number of infections around the world. The United States has the highest number of cases, while Italy has the most deaths