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Anadolu Agency through Getty Images
A commitment that currently rewards northern Europe, at least in the immediate term. The south, Italy, France, Spain and the other states with the greatest financial difficulties will still have to sweat to try to take advantage of something that looks like Eurobonds, which puts it in a somewhat optimistic perspective. At the end of the second Eurogroup in a week, after the failure of 16 hours two days ago, European finance ministers agreed on a package of measures to deal with the economic crisis caused by the coronavirus. Everyone rejoices, north and south. But on closer inspection, southern countries are forced to accept the Dutch request to establish conditionality for the use of funds from the European Stability Mechanism after the emergency has ended. Only in an emergency there is no conditionality. And also, the recovery plan requested by Rome and Paris, although it left the summit with the approval of the ministers, still has no form of financing: there is no reference to common bonds in the final conclusions.
The leaders of the 27 EU countries will unravel this skein at the European Council by video conference next week. French Minister Bruno Le Maire says it clearly, after highlighting the result of tonight’s summit, “a plan of a billion”, he says, referring to the 500 billion that are mobilized by the first “three legs” of the agreement – Month, Bei’s intervention and the Commission’s Sure plan, plus another 500 billion from the European recovery plan. But precisely how and when this plan will be financed remains to be seen: “It remains to debate the financial conditions of this recovery plan,” says Le Maire. “We will continue to debate it.” We are linked to several countries with the idea of issuing joint debt. “
In contrast, Dutch Minister Wopke Hoekstra, the one who collects the most from this Eurogroup, rejoices on Twitter:
3/6 The #ESM can provide financial aid to countries without conditions for medical expenses. It will also be available for financial support, but with conditions. That is fair and reasonable.
– Wopke Hoekstra (@WBHoekstra) April 9, 2020
And on the Eurobonds, Hoekstra reiterates his opposition, as Angela Merkel had made clear before the Eurogroup night meeting:
4/6 We are and will continue to oppose #Eurobonds. We believe that this concept will not help Europe or NL in the long term.
– Wopke Hoekstra (@WBHoekstra) April 9, 2020
Negotiations between the states continue throughout the day, the start of the summit scheduled at 5 pm to 9.30 pm. All afternoon we worked on the details of the engagement that had been on the air since yesterday. To be precise, they work there: Italy, France, Spain, on the one hand, the Netherlands and Germany, on the north, the countries in the front line of the negotiation, a real battle over the future of the Union plagued by the virus. President Mario Centeno wishes to start the meeting with the agreement reached. And in fact, once the video conference has started in an expanded format for the 27 European ministers, the agreement is signed in less than an hour.
At the end of the summit, Centeno himself clarified how the appeal to the MES will work: “The states that request it will have to commit to spending the money only for the coronavirus emergency.” It is the only emergency condition. But, later, “they will be subject to European fiscal and economic coordination within the framework of European surveillance”, in order to respect the rules of the Stability Pact currently suspended, rules that naturally also include flexibility. The only concession is that “if the crisis continues and it will be exogenous,” Centeno specifies, “we will continue without conditions.” In short, we return to a path of stability only when the emergency ends and it is declared as such.
Let’s go to the conclusions. In the Month we read:
“The only requirement for accessing the Mes line of credit will be for states to commit to using it to finance direct or indirect health care costs, care, and prevention costs related to Covid-19. The credit line it will be available until the end of the emergency. After that, states remain committed to strengthening economic fundamentals, in accordance with the European framework for fiscal surveillance, including flexibility. “
However, for the Ministry of Finance, this is a radical change in the normal functioning of the Month: it only asks that the funds and resources that come from the “Saving States” be used to face the costs of direct medical attention and indirect linked to the greed crisis19. note of via XX Settembre. And anyway, is underlined by the Treasury, the problem does not arise for Italy: “It is good to clarify that today Italy has not decided to resort to the Month”, because the agreement in the Eurogroup does not presuppose any automatic recourse to Save States, nor could it do it: it is up to the interested countries to request it
Instead, the request of Italy and France to create a European fund for recovery financed by common stock issues collides with the northern wall that does not allow any reference, even vague, to any form of Eurobonds. The plan only happens in theory, in the sense that the ministers accept its concept, in fact: the idea. But the rest, and they are much more than just details, are postponed for the EU leaders summit next week.
Centeno always explains: “We decided to discuss it in the medium term, not in the short term. The ministers agreed that something new is needed “to finance the costs of the crisis,” an additional fund to be added to the European budget. “But, and this is the point,” we need the guidance of European leaders “regarding the financing this fund. “There are several options on the table: we have to discuss them, leadership by leaders will be crucial.”
Here is the part about the plan in the final conclusions in English: no ‘recovery bonds’ mentioned.
The fact is that to have fresh and ready money, the only way is the Month: 2 percent of the GDP of the states that request it, for Italy about 35 billion euros. For the recovery plan we have to wait, if something will be born.
Of course, as Europe has become so divided these days that it risks reaching the end of its history, just like that, everyone is encouraging an agreement that is not entirely obvious. “Unprecedented, says Centeno, we have never been able to act so quickly in the face of an unprecedented crisis.”
Italian Minister Roberto Gualtieri is very optimistic:
The comment by the European Commissioner for the Economy, Paolo Gentiloni, was also positive:
#Eurogroup has found an agreement A package of unprecedented dimensions to support the health system, layoffs, corporate liquidity and the Fund for a revival plan. Europe is # solidarity
– Paolo Gentiloni (@PaoloGentiloni) April 9, 2020
“We were right to trust Europe,” says the President of the European Parliament, David Sassoli. The proposals made by the Eurogroup go in the right direction, with the transformation of the ESM into “Saving Europe” from the Covid epidemic19, to be used immediately to increase the capacities of our health centers, hospitals and research centers. To save the lives of European citizens. We appreciate the consent of the Eurogroup to Sure and the strengthening of the EIB. In the right direction, the indication to the EU Council to establish a Fund for the reconstruction of Europe will also be financed with innovative tools. In this battle for reconstruction, the European Parliament will always do its part to defend European citizens. “
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