Eurogroup, clash over 100 billion EU for Italy (and Gentiloni is in quarantine)

The Eurogroup of the 19 eurozone financial ministers by teleconference has not been able to find a compromise on the maxi EU funds needed by Italy and other countries most affected by the Coronavirus emergency with already a high debt. The strong divisions did not even allow to agree on the joint press release. Portuguese Eurogroup President Mario Centeno admitted that “more work is needed” and postponed the Council of Heads of State and Government’s political-decision-making level on Thursday 26 March. Last Monday’s Ecofin of 27 EU financial ministers confirmed the line of heads of state and government of “all you need” and “solidarity” to tackle the health and economic crisis. Centeno had announced “new lines of defense for the euro to prevent this economic crisis from turning into financial”. But, moving on to the billions to be disbursed, the usual Netherlands, Germany, Austria, Finland have slowed down on the amounts and asked for an “adequate conditionality”, which seems to recall Troika-like commissioners in Greece. France, Italy, Spain and Portugal are not doing well. The EU Commissioner for Economic Affairs Paolo Gentiloni appeared on the same line, who participated from home as he was in quarantine.

French Finance Minister Bruno Le Maire he reiterated that his government is in favor of important community interventions “in a simple way and without setting conditions that can be penalizing for the countries that use them”. The financial needs to deal with the coronavirus emergency and avoid a long recession are becoming enormous. Germany, starting with 550 billion of internal liquidity (of which 50 billion just to help small businesses and self-employed workers), would intend to exceed one thousand billion with public guarantees. France has forecast 300 billion and is also asking for EU aid. Italy is stuck at only 25 billion, which should be complemented by 11 billion of EU funds. Therefore various sources estimate the Italian need for a precautionary EU credit line for at least 100/150 billion, a figure not officially confirmed by the Italian government with the ongoing negotiations. Italy, France, Spain and Portugal would however like to defer the return to 30/50 years and without further conditions. Also because the countries of the South have allowed the green light to hundreds of billions of German interventions, approving the suspension of the EU restrictions of the Stability Pact and state aid. In addition to Rome, Paris, Madrid and Lisbon, they are calling for a maxi EU stimulus plan to boost growth and jobs.

But different opinions have emerged in the Eurogroup also on specific interventions: both on the use of the existing, such as the 410 billion of the State Savings Fund (MES), and on new measures, starting with the Coronavirus bonds, the first form of debt sharing. “European solidarity is very important, which must be implemented, but fortunately the proposals on eurobonds or similar have not been very successful”, clarified the German Economy Minister, Christian Democrat Peter Altmaier before the meeting, also sending a signal to his colleague of Finance, the Social Democrat Olaf Scholz, member of the Eurogroup. Germany and the Nordics, who call themselves “frugal” due to the limited availability of Community investments, would like to suffice the “maximum flexibility” of national spending and limited Mes loans with stringent conditions. Now the definition of the overall anti-Covid-19 financial “package” passes to the Council of 27 heads of state and government on Thursday 26 March, where Belgian body president Charles Michel is aiming for a compromise between Northern and Southern Europe.