It went badly. The European Council Thursday ended without an agreement on the measures to be taken against the crisis triggered by the coronavirus. No agreement came out of the six-hour videoconference between the heads of state and government: only the decision to give more time. A necessary pause to establish whether Europe will be able to react with a single voice, or whether each country will have to fend for itself. By the end of next week, Italy demands "an adequate solution to the serious emergency that all countries are experiencing", said the Prime Minister, Giuseppe Conte. But even at best, before seeing a real community plan we will have to wait even longer: at least 14 days, deadline within which the Eurogroup will present the new proposals to the Council.
The split remains the same as always: the Mediterranean countries (with some additions) they ask for flexible rules and mutualisation of risks, but the Northern Front refuses.
THE STATE-SAVING FUND (MES)
The most immediate question concerns the use of the 410 billion in the belly of the State bailout fund (MES). Italy, France and Spain would like individual governments to be allowed to access these resources without having to respect the current rules, which require signing an austerity agreement with the EU Troika. A condition that Holland, Austria and Germany, however, do not intend to give up. "If anyone were to think of personalized protection mechanisms developed in the past, then I want to say it clearly: don't bother, Italy doesn't need them," said Conte, who at the end of the Council refused to sign any draft conclusions. Moreover, considering that the limit is 2% of GDP, our country could obtain 36 billion from the Mes: a non-astronomical figure, available with new issues of government bonds that would not impose any commitment on the rigor of the accounts.
EUROBOND (OR CORONABOND)
As for Eurobonds (or Coronabonds, or Sanibonds), nine out of 27 countries are asking for them, the same ones that had written before the Council a letter to Brussels to overcome the taboo of Community qualifications. The fundamental nucleus is once again made up of Italy, France and Spain, in addition to Greece, Portugal, Ireland, Luxembourg, Belgium and Slovenia. On the other side of the fence, the most decisive no comes from Holland and Austria: “We reject a generalized mutualisation of debts”, thundered the number one in Vienna, Sebastian Kurz. Even Germany is formally against it: "I don't think Eurobonds are the right tool," said German Finance Minister Olaf Scholz. However, Angela Merkel continues to maintain a more balanced position. And this gives hope that a compromise is still possible. "We did not specifically talk about the conditionalities or otherwise of the Mes - said the chancellor at the end of the Council - As for the hypothesis of the Coronabonds, I explained that from the German point of view we prefer the Mes, as an instrument created to deal with crises . But we haven't gone into details."
Moreover, the bonds being talked about these days are not real Eurobonds. The bonds requested by Rome, Paris and Madrid would be called European recovery bonds and would be European bonds linked to the coronavirus crisis and issued as a one-off. It means that the public debt of the Mediterranean countries would never, ever be "socialized" in full, but at the same time governments would have trillions of billions available to relaunch the economy, keeping away any speculative attacks on public finances. Not to mention that the ECB, after having launched the Pepp, could also subscribe 100% of the community bonds.
