Europe agrees to work on a common stimulus fund

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“We already know that this is not a slingshot”, but remains to be seen if it will be “Of a bazooka”, said Portuguese Prime Minister Antonio Costa about the new European reconstruction fund which should enable the Old Continent to overcome the disastrous economic consequences of the coronavirus pandemic.

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He and his 26 European counterparts, gathered on Thursday April 23 by videoconference, managed to agree on the need to set up such a tool. But they are still very far from reaching a consensus on its technical modalities (its amount, its governance, the nature of the aid – loans, subsidies? -, its duration, etc.).

A proposal as soon as possible

According to the President of the European Council Charles Michel, this new budgetary instrument must be “Large enough to cope with the scale of the crisis and aimed at the most affected sectors and geographic areas in Europe”. For the time being, the European Council has given the European Commission the task of examining its implementation and putting a proposal on the table as soon as possible.

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For the President of the European Commission Ursula von der Leyen, there is no doubt: the new fund must be integrated into the next multiannual financial framework, i.e. the budget of the European Union (EU) ) for the period 2021-2027, which could serve as a guarantee to raise capital on the markets. Countries that have always opposed any form of debt pooling, such as Germany, the Netherlands and the Scandinavian countries, favor this option.

Disagreements Remain

” Yes [la solution]is that Europe goes into debt to make loans to countries, the answer will not be up to par, because these loans will add to the debts that these states already have! They will just have one more loan, not with the market, but with the rest of Europe. “, moved Emmanuel Macron.

Like France, Spain and Italy, the countries most affected by the coronavirus are in favor of issuing debt at EU level – for which all the Member States would be jointly responsible. “No one disputes the need for a common response, but disagreements remain on the mechanisms to be put in place”, summarized Emmanuel Macron, adding that he “There are states whose deep psychological and political constraints justify very harsh positions”.

Second or third week in May

At the end of the meeting, despite the differences of opinion, the President of the Italian Council, Giuseppe Conte, welcomed a “Great progress, still unthinkable a few weeks ago”. According to him, the new fund should reach 1,500 billion euros. Spain shares this position. Bercy is advancing 1,000 billion euros.

The European Commission considers that a revised budget proposal, including therefore the reconstruction fund, could be adopted by the college of commissioners for “The second or third week in May”. The heads of state and government can then work on this basis. But negotiations around the next EU budget, which started before the crisis, had already proven to be particularly thorny.

A physical summit may be necessary

“If the link between the budget and the reconstruction fund is effectively established, the negotiations will be even more complex”, predicts a European source, for whom “Finding common ground from a distance will be quite simply impossible: it will require a physical summit”.

Pending deconfinement, the heads of state and government expressed their support for the road map of Charles Michel and Ursula von der Leyen, which is paving the way towards the end of the crisis. They also gave the green light to three pillars of aid already cleared by the Eurogroup: 240 billion euros through the European Stability Mechanism, 100 billion through that of an instrument called “Sure” to support the measures partial unemployment in the Member States and 200 billion from the European Investment Bank.

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