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Italy and Spain have been worst hit by the crisis and have proposed a system of coronabonds that involves collective responsibility
“Sixteen hours in a virtual meeting and virtually nothing was achieved,” said one Spanish diplomat, who spoke of an exhausting EU video conference all too reminiscent of the days of the Greek financial crisis.
This time though, in the words of a Danish colleague, “it appears to be a financial crisis, on steroids”.
A deep, deep recession is looming across the EU as a result of the coronavirus pandemic.
The all-nighter into Wednesday, pulled by the EU’s 27 finance ministers, was supposed to provide a financial solution to help shield the worst-hit countries.
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Maltese finance minister
Video conferences are becoming the norm for the EU, but this 16-hour night session went on almost until dawn
They were supposed to pass on the good news to their bosses, and in a matter of days EU leaders would sign off on a new recovery fund in an extraordinary video summit.
At five o’clock in the morning though, they gave up the ghost.
French Finance Minister Bruno Le Maire told colleagues: “As we count the deaths of hundreds and thousands, you ministers are playing with words and adjectives. It shames finance ministers, and it shames Europe.”
What choices do they have?
There had been several proposals on the table worth billions for countries to access emergency funds.
One proposal by the Spanish and Italians was dubbed “coronabonds”: debt or IOUs backed by all members of the eurozone – a collective responsibility.
The Dutch aren’t having any of that. They want member states to be responsible for their own debt and didn’t “budge an inch”, according to Italian officials. For now, that looks to be a non-starter.
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The best idea being put forward is from the French, where all 27 EU governments could access a recovery fund, which can be paid back in the distant future.
Again, it was the Dutch that asked for repayment conditions to be progressively applied. Italy, though, refuses to sign up to another strict debit plan.
One notable change from meetings gone by was that there appeared to be no lead player in the room.
Germany uncharacteristically chose not to take that dominant position and was eager to compromise.
The ministers meet again on Thursday, screen to screen. trying to find a balance between funding that doesn’t exclude the idea of countries sharing the debt, but doesn’t commit to it either.