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AFP
BERLIN
SPANISH Prime Minister Pedro Sanchez urged the EU on Sunday to issue “coronabonds,” controversial pooled debt instruments to help the bloc’s hardest hit countries fund their battle against the devastating economic impact of the pandemic.
Sanchez’s call in Germany’s conservative broadsheet Frankfurter Allgemeine Zeitung came after his Italian counterpart Giuseppe Conte made a similar plea this week in another newspaper of Europe’s biggest economy.
Their campaign targeting German readership is no accident -- Chancellor Angela Merkel has so far been firmly against such joint bonds, fearing that fiscally disciplined nations would be forced to pay for excesses by less frugal nations.
Yet within Germany, calls are growing on her to relent, with some in her centre-right party CDU too sympathising with the hard-hit EU neighbours.
“It is time for the mutualisation of debts,” Sanchez wrote in Sunday’s edition of the Frankfurter Allgemeine Zeitung.
“This is the time to act in solidarity -- by setting up a new mechanism for mutualising debt, by acting in unison in procuring essential medical equipment, by establishing coordinated strategies against cybercrime, and by preparing a large-scale master plan for a rapid and solid recovery of the continent,” he said.
Such joint action would mean “that there are no gulfs between North and South... (and) that no one is left behind,” he urged.
Italy and Spain, backed by France and some key EU officials have been pushing for coronabonds which would allow hard-hit countries to raise funds on the financial markets under the umbrella of the EU.
Proponents argue that this would lower their borrowing costs and mean that they could raise funds without singling themselves out as broke.
Germany, like other northern EU members including the Netherlands, has repeatedly dismissed the idea as an attempt by over-spending southerners to take advantage of the cheap borrowing rates enjoyed by states with balanced budgets.
Merkel’s government is instead looking at using the European Stability Mechanism bailout fund, which German Finance Minister Olaf Scholz said could be activated “with no senseless conditions” to help struggling states.
The ESM, set up at the height of the eurozone debt crisis in 2012, helped fund the massive bailouts needed then but its aid normally comes with strict and often burdensome conditions.
For Sanchez, the ESM could help in a first step by ensuring a financial lifeline to economies in trouble.
“But it would not be sufficient in the medium term,” wrote the Spanish leader.
“The challenge that we are faced with is immense and unprecedented. It requires an unanimous, extreme and ambitious response in order to preserve our economic and social system.”
Debate over the coronabonds is heating up with euro area finance ministers slated for talks on Tuesday to chart the bloc’s next steps in battling the economic fallout from the coronavirus.
In an editorial this week, Spiegel magazine accused Germany of “lacking solidarity, being small-minded and cowardly” by rejecting its fellow EU members’ calls.
Spain saw its third consecutive daily decline in the number of people dying from the coronavirus pandemic as the country recorded another 674 fatalities on Sunday.
The health ministry said total deaths were now 12,418, the highest in the world after Italy, since the pandemic emerged in China in December.
The 674 fatalities, which were sharply down on the record 950 declared on April 2, represented an increase of 5.7 percent over the last 24 hours, and compared with a 30 percent leap in one recent day.
The number of infections rose 4.8 percent to 130,759, indicating a slowdown in the spread from 8.2 percent on April 1 and 14 percent 10 days ago.
The number of people declared to have recovered has increased by 11 percent, to 38,080.
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06/04/2020
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