No deal, for now. After a two-hour video conference meeting, Tuesday the Eurogroup has not found an agreement on the maxi-plan to stem the economic consequences of the coronavirus. What divides eurozone ministers is primarily the policy to be followed on the State bailout fund (Month). The deployments are always the same: Mediterranean countries and the Northern Front.
Italy, France, Spain, Portugal and Greece they ask that i 410 billion in the belly of the Fund are made available to governments to deal with the emergency, but without the "conditionalities" currently envisaged. The reason is that, according to the rules in force today, in order to access the resources of the Mes, an austerity pact must be signed with the EU Troika, undertaking to correct the accounts and launch structural reforms. But it is evident that in this phase – with the pandemic spreading and the Stability Pact officially suspended (Germany itself will bring the deficit/GDP to over 2020%) – no government could ever commit to enact restrictive fiscal policies. Also because such a move would cause the prices of sovereigns to soar.
They are on the other side of the fence Holland, Austria, Finland and Germany. The first three decisively reject the proposal of the Mediterranean countries, while the position of Berlin seems more inclined towards mediation. The question will be better clarified on Thursday, when we talk about the State-saving Fund al European Council (third meeting in three weeks). It is true, the heads of state and government will not receive any preliminary agreement from the Eurogroup on which to set up the debate, but a compromise is nonetheless possible. The most accredited hypothesis is that recourse to the State-saving Fund is granted on condition that each country uses the resources exclusively to face the crisis triggered by the coronavirus.
The proposal presented to the Eurogroup by the number one of the Mes also goes in this direction, Klaus Regling. The idea is to grant loans of up to 2% of GDP (36 billion for Italy) to be spent on an anti-pandemic function (health, businesses and social safety nets) and with a facade of conditionality: nothing more than compliance with the Pact of Stability. The Nordics rejected this too, including the German Olaf Scholz.
Nothing new, for now, not even on the slope Eurobonds (or Coronabond, or Sanibond). Italy, France and Spain consider community bonds a fundamental element of the medium-term economic strategy, but also in this case they have to come up against resistance six Northern countries. From the outset, however, it was clear that the Eurobond negotiations would be much longer and more complicated: the technical difficulties are greater and it will probably take months to iron them out (if it is possible).
To date, the only real bazooka that the Eurozone can immediately take up against the coronavirus is that of the Mes. The final decision of the European Council will probably be guided by the German chancellor, Angela Merkel.
