15 days to rebuild the European economy

US, WASHINGTON (ORDO NEWS) — The EU summit on Thursday, dedicated to the coronavirus epidemic, resulted in a clash of supporters of the development of a new “Marshall Plan” for economic recovery and countries opposing large-scale intervention.

The first is headed by Spanish Prime Minister Pedro Sanchez. The main opponents of his ideas are Germany and the Netherlands. The goal of the summit was to adopt a “coordinated strategy” for restoring public life, the economy and industry on the continent after the end of the pandemic.

However, the fierce resistance of the northern states to share the costs associated with the worst health crisis that Europe has been experiencing recently has not allowed concrete decisions.

The summit nearly ended in complete failure when Sanchez and Italian Prime Minister Giuseppe Conte refused to support the draft joint statement, full of vague phrases and expressions and not proposing specific measures. The pressure from Spain, which needs more clarity about the timing, and Italy, has led EU leaders to instruct the Eurogroup to develop proposals that will help countries cope with this “unprecedented crisis”.

According to diplomatic sources, it seemed that the text of the statement with vague and inaccurate language was adopted when the President of the European Council, Charles Michel (Charles Michel) asked all participants in the videoconference whether they agree with her. “No,” Sanchez answered. And he warned that he would not sign “no agreement that will not establish clear deadlines,

Fearing that Italy might block the decision of the summit, Michelle was forced to revise the statement. After a lengthy argument (the video conference lasted six hours), it was decided to set a deadline by which the ministers would propose a new plan. “Three weeks,” suggested Brussels. “Never. Ten days, ”Rome demanded. As a result, ministers will have 15 days to develop a plan for the restoration of the European economy, which is doomed this year to recession due to the coronavirus pandemic.

Sometimes the situation at the summit held in the format of a videoconference became tense. Again a draw, again the north stands for every country to come out of the crisis, and the south calls for coordinated actions. Nothing changes: proponents of the austerity regime continue to impede any measures aimed at sharing costs to combat the crisis, while proponents of cost-sharing have failed to achieve their goal even in the face of such a massive problem.

According to diplomatic sources, the Netherlands and Austria took a tough stance, and German Chancellor Angela Merkel made it clear that she would not support the idea of ​​pan-European bonds proposed by nine countries led by Spain, France and Italy. French President Emmanuel Macron advocated the use of this tool, arguing that it was an unprecedented crisis that affected all countries equally.

Italy also managed to exclude from the text of the statement the only specific short-term measure. She asked the European economics ministers not to use the European stabilization mechanism, which has 410 billion euros, which countries in difficult situations could apply for a loan in the plan.

A reference to the financial stability fund, which recalls how some countries managed to avoid default during the financial crisis, outraged Italian Prime Minister Giuseppe Conte, who refused to use a mechanism designed for the debt crisis. According to some sources, Merkel urged not to immediately abandon such a decision, given that it opens up broader prospects than pan-European bonds.

An ambitious group of countries led by Italy, Spain and France account for almost half of the EU population. However, from an economic point of view, they bring only losses. These nine countries account for 72% of Eurozone government debt. In Italy alone, the amount of debts (2.38 billion in 2019) is almost equal to all the debts of Germany and the Netherlands combined (2.47 billion).

Netherlands charges

The governments of Germany and the Netherlands, led by Angela Merkel and Mark Rutte, opposed the use of common resources to overcome this crisis. Both countries, with the support of Austria and Finland, among others, believe that the first step is to use national resources. You can also take advantage of the temporary suspension of the Stability and Growth Pact, according to which the annual budget deficit should not be higher than 3%, as well as the easing of state support, which limited the amount of subsidies to companies in difficulties.

However, these two measures will not benefit everyone, because they can be used only by countries with wide opportunities for financial maneuvers, for example, Germany or the Netherlands. Lossy countries (Spain), whose debt accounts for almost 100% of GDP (Spain and France) or has already exceeded 100% (Italy), do not have the necessary budgetary funds to start implementing a full-scale financial stimulus plan.

Dutch Finance Minister Wopke Hoekstra, at a meeting with his colleagues in a video conference format, invited the European Commission to analyze why some countries have insufficient budgetary funds, despite the fact that there has been economic growth in the eurozone for seven years. This is the longest period of prosperity since the advent of the single currency in 1999.

According to a diplomatic source in one of the southern countries, “the problem is that the crisis associated with coronavirus has not yet affected all countries equally.” Southern countries are convinced that as a result, all EU countries will experience negative consequences. Then the time will come to adopt a pan-European plan for economic recovery, which Pedro Sanchez called the new “Marshall Plan”.

No supplies. Borders reappeared in the Schengen area

The coronavirus summit coincided with the 25th anniversary of the entry into force of the Schengen Agreement, which on March 26, 1995, abolished border control between the countries that signed it. After a quarter of a century, more than a dozen Schengen participants, including Spain, regained internal border control, and all EU members except Ireland introduced restrictions on crossing external borders.

Such data were cited by the European Commission in a special document. It was also indicated there that the restrictions affected the main European transport routes, which account for up to 75% of freight traffic. Deliveries are delayed by more than 24 hours; we are also talking about the transportation of medical equipment and medicines.

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The article is written and prepared by our foreign editors from different countries around the world – material edited and published by Ordo News staff in our US newsroom press.