The coronavirus pandemic is likely to lead to a significant recession throughout Europe, with all countries spending more money than they can generate. Despite EU Commission President Ursula von der Leyen urging member states to “invest whatever is necessary to have the economy going further”, last week EU member states failed to reach a compromise on debt-sharing for the fourth time in a row. Nine EU countries, namely, Spain, Italy, France, Belgium, Luxembourg, Ireland, Portugal, Greece and Slovenia are urging Brussels to issue eurobonds, otherwise called ‘coronabonds’ – a common debt instrument aimed at raising funds on the market.
However, Germany, the Netherlands, Australia and Finland are heavily opposed to the measure and resisting the calls.
They see it as potentially putting their taxpayers on the hook for the debt of other countries.
Both tend to have conservative fiscal policies, with low debt and low deficits, and argue that other pre-existing eurozone tools should be used to overcome the COVID-19 outbreak.
They also worry that coronabonds could be the thin end of the wedge towards making all eurozone debt mutually held, something which they also resisted during the global financial and eurozone crisis.
According to a French Finance Ministry official, though, Paris and Berlin are preparing a compromise to put to finance ministers at the next eurogroup, aimed at unblocking the stalemate.
In an exclusive interview with Express.co.uk, Italian MEP Antonio Maria Rinaldi claimed France will soon cave in to German’s demands, as it is part of its EU wider-strategy.
He said: “France has always acted like this.
“At first, it seems like it is on the side of southern EU countries like Italy and Spain.
“But then, it always ends up siding with Germany.
“France’s strategy is to have the face of an angel but the soul of a devil.
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“It is their only way to achieve what they really want.”
According to a recent Politico report, French President Emmanuel Macron sees both danger and opportunity with coronavirus in the EU.
The danger is that the EU itself could collapse, particularly if countries hardest hit by the crisis such as Italy and Spain do not feel the EU has done enough to help them.
A senior official close to the French President said: “This solidarity issue isn’t a gimmick, it is the condition of the survival of the European project in the aftermath.”
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But Mr Macron also sees an opportunity to push through changes at the European level – from economic integration to greater EU powers on health policy.
Stéphane Séjourné, a former key aide to the French President, added: “He is very focused on making sure that the French people don’t reject Europe as an entity that wasn’t able to protect them and the Europeans.
“We need proof that the EU is useful and it can be useful on the sanitary response and the economic recovery afterward.”
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