Last night's #EUCO revealed that a pandemic will not be enough to overcome the traditional rifts, divisions and constraints of the eurozone
Italian PM Conte told other EU leaders “don’t bother” with traditional bailouts or ESM credit lines that come attached with austerity conditions and loss of sovereignty as in the last eurozone debt crisis
That's significant. After over five hours of acrimony, EU leaders gave up and have asked eurozone finance ministers to come up with a plan over the next 10 days. It is not clear what
Rome and Madrid threatened to veto any EU statement that does not include “innovative financial tools”, debt mutualisation also backed by France, Belgium Greece, Ireland, Luxembourg, Portugal and Slovenia
“What will we say to our citizens if Europe does not prove capable of a united, strong and cohesive reaction in the face of an unpredictable and symmetrical shock of this epoch-making impact?,” Conte said
Sanchez said: “we will be putting at risk the entire European project”
"The same mistakes of the financial crisis of 2008 - which sowed the seeds of disaffection and division with the European project, and provoked the rise of populism - cannot be made.
"The same mistakes of the financial crisis of 2008 - which sowed the seeds of disaffection and division with the European project, and provoked the rise of populism - cannot be made.
Italy has rejected outright use €410bn ESM because it comes attached with economic restructuring, budgetary surveillance and future austerity
“I want to say it clearly: don't bother, you can keep it, because Italy doesn't need it,” Conte told #EUCO
“I want to say it clearly: don't bother, you can keep it, because Italy doesn't need it,” Conte told #EUCO
Netherlands is leading the push back, with Germany behind. “I cannot imagine any circumstances in which we agree with eurobonds or coronabonds, it goes against the design of the euro,” said Rutte, the Dutch PM
“It would take the Eurozone to another sphere, it would be to cross the rubicon and go to a Union of transfers, far beyond what was envisaged in Maastricht. "
As with the eurozone debt crisis, the EU is caught on the horns of a dilemma. If it gives in to Italy/Spain it gives a gift to populists in the Netherlands/Germany. And if does not, insisting on usual conditionality, it fuels the popularity of Salvini and southern populists
The EU has done a lot but mainly to remove constraints for governments, in terms of state aid and fiscal rules (the escape clause) with backdoor support via ECB asset purchases
The crisis has exposed that the big artillery is with the nation state with national budgets and health services that can rise to the challenge of dealing with the pandemic rather than the EU
The politics of all this is just beginning to unfold and, as Sanchez, observed developments are unlikely to be positive for the EU (which is still miles off agreeing its finances for 2021-2027)
