by N. Peter Kramer
The Eurogroup finance ministers unlocked a €540billion package of measures aiming at stopping the coronavirus from ravaging the EU economy. The new safeguards aim to mitigate the economic fallout from the pandemic by protecting workers, keeping companies afloat and protecting memberstates from ruin. Italy and Spain had hoped the severity of the health and economic crisis would open the door to pooling the total debt of the memberstates with ‘corona bonds’ (called in the past ‘eurobonds’). The text of the agreement refers to a ‘recovery fund’ that could provide money to the memberstates, corona bonds are not mentioned.
The Italian and Spanish colleagues of the Dutch finance minister Wopke Hoekstra read in the text that corona bonds are still possible, but he was very clear, ‘It is actually very simple, these bonds are a thing I wasn’t ok with, I am not ok with and I will never be ok with’. Hoekstra isn’t alone. He has the backing of Germany, Austria and the Scandinavian countries.
The deal allows the European Investment Bank to set up a fund of €200 billion in loans for cash-strapped companies across the bloc. The European Commission’s new instrument SURE , a €100billion jobless reinsurance plan, also got the green light and aims to protect workers help with health-related issues. The European Stability Mechanism (ESM) will provide €240 billion in cheap loans and will only be available for eurozone countries to handle the crisis. No other conditions apply. Hoekstra added that countries could request an ESM cheap loan to cope with other costs, including the impact of the containment measures, but in that case, they would have to accept reforms. Eurozone governments should nonetheless remain committed to keeping their finances in check with EU rules after the coronavirus is over, the Eurogroup statement says.
Now it is up to the Council, the EU Leaders, in their summit next week, to agree with the package.
