EU’s Final Straw: Eurozone Ministers Strike Deal to Fight Pandemic-Triggered Recession

Written by | Saturday, April 11th, 2020

While experts have warned there is no sign yet that the peak of the the Covid-19 pandemic in Europe has been reached,representatives of 19 eurozone countries have finally reached what French Finance Minister Bruno La Maire has called an “excellent accord” on fighting the pandemic-triggered recession on the continent. After hours of talks on Thursday (9 April), the finance ministers agreed to make €500 billion available “immediately” to stimulate the EU economy as it struggles with the economic consequences of the ongoing coronavirus pandemic. Following the tough negotiations mainly between EU heavyweights Germany and France, Germany’s Finance Minister Olaf Scholz praised the late-night deal as a “great day of European solidarity.”
Scholz said that the plan provides “three strong answers” to the crisis, including aid to small and mid-sized businesses through the European Investment Bank, short-term work programs for the labor force, and credit linesto the European Stability Mechanism made available to affected states “until Covid-19 crisis is over”.This plan will provide a “triple security network for workers, companies and states,”Spain’s representative Nadia Calvino added. Earlier, the EU countries had disagreed on whether or not the loans should be conditioned on financial reforms and also how to finance the fund itself, with Italy, Spain, France and other, mostly southern EU countries, wanting a joint “coronabonds” borrowing scheme, a proposal that was strongly opposed by Germany, the Netherlands, Finland and Austria.
These negotiations happend against the backdrop of existing divisions and tensions among individual EU member states, whose leaders are well aware thatCovid-19 pandemic could more destructive than Brexit, migration and bailout crises. In a rare intervention, Jacques Delors, the now-legendary President of the European Commission, who helped build the modern EU, broke his silence recently to warn that lack of solidarity posed “a mortal danger to the European Union”. Enrico Letta, a former Italian Prime Minister, has warned the EU faces a “deadly risk” from the global pandemic. “We are facing a crisis that is different from previous crises,” he stressed, which is partly because of the unpredictable progression of the virus, partly because “Europeanism” has been weakened by other crises of the past decade.

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