Berlin (CNSNews.com) – Under pressure to forge a unified plan to address the economic fallout of the coronavirus pandemic, eurozone finance ministers failed to agree on an economic response to support the bloc’s governments and businesses.
Despite lasting over 16 hours and extending into the early hours of Wednesday morning, ministers in the online meeting remained divided over which conditions to attach to loans issued through a eurozone bailout fund, and whether or not to issue so-called “coronabonds.”
“We came close to a deal but we are not there yet,” Eurogroup president Mário Ceteno tweeted Wednesday morning.
“My goal remains: A strong E.U. safety net against fallout of COVID19 (to shield workers, firms & countries) & commit to a sizeable recovery plan,” he added.
The “Eurogroup” comprises finance ministers from countries in the eurozone – the 19 E.U. member-states that have the euro as their currency.
Coincidentally, the E.U. the same day announced a coordinated 20 billion euro ($21.7 billion) package to support “partner countries” across the globe deal with the pandemic, addressing “the immediate health crisis and resulting humanitarian needs” as well as the longer term economic impact.
“While we are doing everything we can to provide support of our citizens, we also need to assist our partners in our direct neighborhood and beyond to address the impact it will have on their livelihoods, stability and security, as their problems are our problems,” E.U. foreign policy chief Josep Borrell said in a statement.
The plan to help countries outside the E.U. appears a stark contrast to the difficulty agreeing on an economic strategy for the bloc itself, and comes at a time where many view the E.U.’s handling of the pandemic as crucial to its future. Some have warned a poor response will fuel euroskepticism.
German Chancellor Angela Merkel told reporters on Monday that the pandemic presents the biggest challenge to the E.U. since it was created. “Everyone has been hit equally by this and it must be in the interest of everyone, and of Germany, that Europe emerges stronger from this test,” she said.
France’s finance minister said on Monday the country is facing its deepest recession since the end of World War II. In a televised address last week, President Emmanuel Macron warned that “the day after won’t look like the day before.”
Still, in the divisions preventing a coordinated economic response for the E.U., France and Germany currently sit on opposing sides.
France, together with Italy and Spain, are pushing for the coronabonds proposal, in which the E.U. would collectively sell bonds to help fund economic rebuilding efforts in the countries worst affected by the crisis, such as Italy and Spain.
But Germany, along with the Netherlands and Austria, oppose the idea, recalling tensions arising during the 2008 eurozone debt crisis and lasting until 2015, when Greece was moments away from defaulting on its debts.
Germany prefers an approach of allowing countries to borrow from the E.U.’s bailout fund known as the European Stability Mechanism (ESM), which has an unused lending capacity of €410 billion ($445.5 billion).
A meeting on March 26 failed to reach agreement, and this week’s Eurogroup meeting was meant to find a solution. But neither the coronabonds nor the ESM proposal could be agreed upon.
“The E.U.’s initial belated and chaotic response and its failure to coordinate has weakened its reputation and provided fertile ground for euroskeptics,” said Agata Gostynska-Jakubowska, a senior research fellow at the Centre for European Reform.
Italian Prime Minister Giuseppe Conte warned last week that “nationalist instincts, in Italy and in other countries, will be very strong if Europe is not up to the challenge.”
“What will we tell our citizens if Europe does not prove capable of a united, strong and cohesive reaction in the face of a symmetrical, unpredictable shock of this historical magnitude?” he asked.
Bundestag chairman and former president Norbert Lammert said the impression of limited solidarity would lead to political damage to the bloc.
The foreseeable result of continued conflict over economic response, he told Süddeutche Zeitung on Tuesday, was “the further weakening of the European community of states, which right now needs nothing more than a convincing signal of a joint effort.”