Coronavirus could mark the end of the EU ‘European project’ if member states cannot agree to share rescue package debt, the bloc’s economics commissioner has warned.
Paolo Gentiloni, a former prime minister of Italy, said it was essential for Germany, the bloc’s most powerful member, to come to an agreement over debt with states which have been hardest hit.
He told Italian radio station Radio Capital: ‘The European project is in danger of dying out.’
Coronavirus could mark the end of the EU ‘European project’ if member states cannot agree to share rescue package debt, the bloc’s economics commissioner Paolo Gentiloni has warned
‘It is clear that if the economic differences between European countries, rather than shrinking in the face of a crisis like this, instead increase… it will be very difficult to keep the European project together,’ he warned.
Without Germany, he added, ‘we cannot find a compromise’.
On Thursday, Germany and other northern EU states rejected a proposal backed by nine countries, including Italy, Spain and France, for so-called ‘coronabonds’.
These would be issued in the name of the eurozone as a whole and would in effect result in pooled debt among member states who share the single currency zone.
Mr Gentiloni said he had expected Germany’s reaction, calling it a ‘long-standing vision that we know by heart’.
Germany has repeatedly dismissed the idea of mutualised, or shared, European debt.
Mr Gentiloni, a former prime minister of Italy, said it was essential for Germany, the bloc’s most powerful member, to come to an agreement over debt with states which have been hardest hit. Pictured: German leader Angela Merkel
The country claims it is an attempt by over-spending southern states to take advantage of the cheap borrowing rates enjoyed by countries with balanced budgets, without being subject to fiscal austerity measures.
European member states should ‘start with the common objectives’ in order to break the standstill, Gentiloni said, adding that he recognised that pooled borrowing would never be agreed upon.
‘We need a new unemployment guarantee instrument, a business support plan and we need the “Green Deal” development model to not be forgotten,’ he said.
He added that one possible way to finance such objectives was to issue bonds.
Mr Gentiloni told Italian radio station Radio Capital: ‘The European project is in danger of dying out’
‘One is to issue bonds, but not generically to mutualise the debt, which will never be accepted,’ he conceded.
Gentiloni also said he was ‘not very optimistic’ about continued discussions over the possible use of the European Stability Mechanism, which provides financial assistance to countries in difficulty.
It normally attaches strict fiscal conditions to its emergency borrowing.
Some say that the mechanism, set up in 2012 during the European sovereign debt crisis, would unfairly punish already highly indebted countries such as Italy, by imposing new and unattainable conditions for fixing its public finances.
On Thursday, Germany and other northern EU states rejected a proposal backed by nine countries, including Italy, Spain and France, for so-called ‘coronabonds’
Comparisons with past crises were unhelpful in confronting the challenge posed by the coronavirus pandemic, Gentiloni suggested, a view also voiced by Italy’s minister for European affairs.
‘It’s a new crisis, it’s not comparable to the crisis of 2008, there is no guidebook, there are no clues that leaders recognise from the past,’ Vincenzo Amendola told journalists on Monday.
‘When we think about the sacrifices of the people, it’s a huge, extraordinary novelty with dramatic consequences, and leaders must respond to the challenge.’
This map shows the latest number of infections around the world. The United States has the largest number of cases, while Italy has the most deaths