Εurozone finance ministers failed to agree on more support for coronavirus-hit economies. The breakdown at the eurogroup late on Tuesday came after Italy and the Netherlands squabbled over what conditions should be attached to euro zone credit, blocking progress on half a trillion euros worth of aid.
The Eurogroup has been suspended and will continue on Thursday, Eurogroup President Mario Centeno posted on Twitter on Wednesday.
After 16h of discussions we came close to a deal but we are not there yet.
I suspended the #Eurogroup & continue tomorrow, thu.
My goal remains: A strong EU safety net against fallout of #covid19 (to shield workers, firms &countries)& commit/ to a sizeable recovery plan pic.twitter.com/kGHoURgdrv
— Mário Centeno (@mariofcenteno) April 8, 2020
The finance ministers mainly disagreed on the terms that will accompany the European Union’s Stability Mechanism’s precautionary credit line, which has 410 billion euros in funds. This mechanism was used during the Greek crisis and the loans were accompanied by strict terms (Memoranda) for privatizations, labor market, reforms, etc. and with goals that had to be achieved in order to give the next installment.
Italians believe that because no country is responsible for the shock of Covid-19 and because the impending economic crisis is not due to the mishandling of public finances by any state, there is no reason to re-impose terms and memoranda on such strict terms.
In contrast, The Netherlands, Austria and Finland believe that the conditions to be set are twofold: first, to ensure that the funds will be used exclusively for the fight against the corona and not for other purposes. And then, as soon as the big shock of the pandemic passes, classic loan terms should be used.
Dutch Finance Minister posted on Twitter on Wedndesday:
On the use of the ESM is no compromise yet and therefore the leaders must decide on this topic. The ESM is a lender of last resort when countries are in deep financial trouble. In our view the use of this budget has to come with some form of conditions.
— Wopke Hoekstra (@WBHoekstra) April 8, 2020
French Finance Minister Bruno Le Maire said on Wednesday, that European countries must rise to meet the challenge of the current exceptional climate. , after an initial failure at the Eurogroup meeting to agree on funding measures.
“Along with (German finance minister) @OlafScholz, we call on all European states to be up to the challenge posed by these exceptional times so that we can arrive at reaching an ambitious agreement,” Le Maire wrote on Twitter.
Après 16 heures de négociations, pas d’accord à l’#Eurogroupe sur la réponse économique à la crise du #coronavirus. Nous reprenons demain. Avec @OlafScholz, nous appelons tous les États européens à être à la hauteur des enjeux exceptionnels pour parvenir à un accord ambitieux.
— Bruno Le Maire (@BrunoLeMaire) April 8, 2020
Le Mairie retweeted a tweet by Olaf Scholz. The German Finance Minister said “in these difficult hour, Europe must be close together. Together with @BrunoLeMaire I therefore call on all euro countries not to refuse to solve these difficult financial questions and to enable a good compromise – for all citizens #Coronavirus.”
In dieser schweren Stunde muss #Europa eng zusammenstehen. Gemeinsam mit @BrunoLeMaire rufe ich deshalb alle Euroländer auf, sich einer Lösung dieser schwierigen Finanzfragen nicht zu verweigern und einen guten Kompromiss zu ermöglichen – für alle Bürgerinnen und Bürger #Corona.
— Olaf Scholz (@OlafScholz) April 8, 2020
The teleconference of the eurogroup will resume on Thursday. Will they manage to bridge divisions and finally agree to help the European citizens?