(Bloomberg) — European Union finance ministers agreed on a 540 billion-euro ($590 billion) package of measures to combat the economic fallout of the global pandemic.
In an emergency teleconference on Thursday, they approved a plan to stave off what’s expected to be a recession of unprecedented size, drawing a round of applause from the participating officials.
It includes a joint employment insurance fund worth 100 billion euros, a European Investment Bank instrument intended to supply 200 billion euros of liquidity to companies, as well as credit lines of up to 240 billion euros from the European Stability Mechanism — the euro area’s bailout fund — to backstop states as they go on a spending spree to help economies back on their feet.
The deal will lay to rest some concerns that the bloc was incapable of uniting behind a common strategy when it was most urgently needed. It all still needs to be signed off by leaders as early as next week and tensions persist.
Covid-19 has overwhelmed Europe, with the continent suffering more than 65% of the worldwide deaths attributable to the virus. The scale of the damage shines a spotlight on the vulnerabilities of a union that in the past decade has been rattled by the Greek debt crisis, an influx of refugees and then Brexit.
But the coronavirus outbreak — in the words of German Chancellor Angela Merkel, a veteran of many geopolitical fights — poses the biggest threat to the EU since World War II. It has tested every nation’s commitment to solidarity.
A Compromise?
Even as the virus’s reach has been indiscriminately global, most countries have acted alone and in their own interests. In Europe, it has pitted the more frugal countries in the north against Italy and Spain, the worst-affected countries. The disagreements fostered a climate of mistrust and simmering resentment.
“Today we agreed on three safety nets and a plan for the recovery to ensure we grow together and not apart once the crisis is behind us,” Mario Centeno, the Portuguese finance minister who runs the so-called Eurogroup meetings, told reporters after the teleconference.
They also agreed to work on a temporary fund that would help kick-start the recovery and support the hardest-hit countries, while leaving open key details, including how it would be financed.
This was a victory for countries including France, Spain and Italy, which have been pushing for this mechanism to be financed through joint debt issuance. French Finance Minister Bruno Le Maire said the fund could be around 500 billion euros.
The Italian minister said that while they endorse the overall agreement, their leaders would bring up this issue of joint debt issuance at the next meeting of EU leaders. The two countries are part of a group of around 10 that have been pushing for so-called coronabonds to help share the burden of this crisis.
Yet they’re likely to encounter resistance from some of the Northern, more hawkish member states.
“We are and will remain opposed to #Eurobonds,” Dutch Finance Minister Wopke Hoekstra said on Twitter. “We think this concept will not help Europe or the Netherlands in the long-term.”
As with many an EU deal, everyone claimed a victory and some of the thornier details will still need to be ironed out among the leaders.
(Updates with Dutch finance minister in the final paragraph)
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