EU: the 27 relatives of a rescue plan, without “coronabonds”

Brussels | The european ministers of Finance should overcome their divisions and succeed to agree on Tuesday on one of the first measures economic commons in the face of the coronavirus, but they will not be as ambitious as hoped for by Paris, Rome and Madrid.

This first european response should take shape along three axes: loans from the emergency fund of the euro area, a guarantee fund for companies and a support for the part-time unemployment.

The idea of a “fund-raise” or of a “solidarity fund” that will be able to issue the debt common to the member States, as proposed by France, continues, however, to divide the Union.

The French Finance minister Bruno Le Maire, the judge is nevertheless essential that this “option” is “mentioned” on Tuesday in the conclusions of the ministers, and left to leave ” two or three months in which to define the details of operation “. “We need a more powerful instrument to deal with the consequences of more long-term,” he insisted Monday.

His idea: a temporary fund of several hundred billion euros (3% of european GDP) to finance the essential public services (health), the sectors threatened (transport, tourism, etc.) and new technologies, loans repayable over 15 to 20 years.

France, with Italy and Spain – two countries that are highly affected by the epidemic – and other euro-area countries, had already desired the creation of an “instrument” by which the 19 states that have adopted the single currency to borrow in common, in the form of coronabonds (corona-bonds).

On Monday, two eu commissioners, the French Thierry Breton and the Italian Paolo Gentiloni, has also advocated this solution, in order to finance the needs after the crisis.

But Germany and the netherlands have already firmly rejected these “coronabonds” during a european summit virtual the 26 march.

“Terrible “

These two countries and other countries of Northern Europe, whose debt is considered more secure, refuse to accept any mutualisation of risk with highly indebted countries like Italy or Spain, which they see as lax in their management.

According to a diplomatic source, the French could be discussed in a more or less vague in the conclusions so as to avoid a deadlock.

“In the end, everyone will be able to say: the coronabonds are still there. Or not. And the debate will continue, ” explains the diplomat.

The proposals of the ministers, who are from 15: 00 (13: 00 GMT) video, will come in support of the recovery plan massive of the european central Bank (ECB). They will be submitted to the heads of State and government of the EU, which had commissioned on the 26th of march.

The first is to use a part of the 410 billion to fund the european stability Mechanism (ESM), created in 2012 when the debt crisis in the euro zone to help States that are experiencing funding problems in the markets.

The ESM may grant loans to a troubled State of up to 2% of its GDP, with counterparties that are more limited than usual.

“We can’t say at this time to a country affected by a crisis as terrible: OK, now you must submit to a surveillance programme (…) It is, of course, politically, completely impossible,” said Monday the european commissioner for the Economy, Paolo Gentiloni.

The european investment Bank (EIB), the financial institution of the member States, should also be put to contribution to create a fund to guarantee pan-european, the amount of which must still be debated.

It even offers the provide of 25 billion euros, by means of guarantees of the member States, to mobilise up to € 200 billion extra to companies.

Ministers should, finally, validating the plan of the european Commission, aimed to create an instrument to guarantee up to 100 billion euros of national plans for partial unemployment, strengthened or created as a result of the epidemic.

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