At odds over corona bonds

The 27 EU states have postponed taking a decision on the introduction of Eurobonds as a joint instrument for tackling the economic consequences of the corona crisis. While Italy and Spain are urgently demanding "corona bonds", countries like Germany, the Netherlands and Austria oppose the idea. Commentators analyse the background and implications of the conflict.

Open/close all quotes
Handelsblatt (DE) /

Honesty would be better

The Maastricht Treaty's no-bailout clause, which stipulates that the EU and individual member states cannot be held liable for the debts of other member states, is proving unhelpful in this crisis, writes Handelsblatt:

“This was already evident in the euro debt crisis. Back then Article 125 was circumvented by creating the European Stability Mechanism. ... In the long run those who share a currency will need a common economic policy, a common budget and common bonds - at least for a small part of the total public debt. But the governments don't dare tell their people this. By remaining silent, they risk aggravating the conflict of interests between efficient and financially weak euro states. In the end this could tear the Eurozone apart. And that would then be a catastrophe for the euro states, which still feel big and strong in this crisis.”

Corriere del Ticino (CH) /

Always the thrifty who have to fork out

Corona bonds would encourage states to incur even more debt, warns Corriere del Ticino:

“It's clear that, especially from the point of view of the markets, the guarantees on community debt would de facto be borne by the thrifty countries, while the less puritanical countries (including Greece and Italy, but also others with excessive debt) could theoretically, without corrective measures, continue along the path they have taken so far as regards their public finances. ... In this case there would be the danger of a general downgrading of creditworthiness, resulting in higher interest payments for all. ... Those who want corona bonds argue that there is an emergency now. ... But it's not that the EU and the Eurozone are deaf. Substantial measures have already been adopted.”

Público (PT) /

Better to give away than to lend

Ana Luís Andrade, an analyst from The Economist Intelligence Unit, examines fiscal policy alternatives in Público:

“The classic version of Eurobonds will not prevent an increase in the debt of economies that are in a less sustainable budgetary situation. ... Eurobonds are therefore of little use as a solution to this crisis, not to mention the fact that such a major step towards a European fiscal union would require a level of social and political harmony that we do not have currently. ... Another option would be to transfer money to economies in a weaker budgetary position. ... This version would be a maximum example of European solidarity.”

The Spectator (GB) /

No institution left looking as helpless as the EU

The Specatator examines the problems the virus is causing in EU financial policy - not without a hint of malicious glee:

“Unlike Britain, Spain and Italy cannot quantitatively-ease their way out of this crisis because, as members of the Euro, the control of their money supply is in the hands of the European Central Bank. It's President, Christine Lagarde, at one point seemed to dismiss the idea that this crisis had anything to do with her or her bank. ... Many have been caught out by the Covid-19 crisis, but no institution has been left looking quite so helpless as the EU. One feels it is sorely missing a common enemy - i.e. Britain - to help keep it together.”

Observador (PT) /

We're all in the same boat

Observador appeals for a compromise:

“The governor of the Bank of Portugal has proposed a solution: the countries finance themselves through bonds issued by the European Stability Mechanism - but without imposing economic policy conditions, as was done during the troika era. The only acceptable condition is that the resources be used to cover the costs of the pandemic, and possibly also to prepare the health sector for crises in the long term. ... This would reassure the countries of the north while at the same time dispelling the spectre of the bailout packages under which the countries of the south suffered so much. ... We're all in the same boat. ... Being selfish, as tempting as it may be, is irrational.”

NRC Handelsblad (NL) /

1-0 for Putin

The refusal will have negative consequences for the Netherlands, believes Tom-Jan Meeus, columnist for NRC Handelsblad:

“If the EU states don't stand up for each other even in this crisis - when will they? And as [Dutch Finance Minister] Hoekstra was being portrayed as a boor in Italian newspapers, Russian aid convoys were arriving in northern Italy. Not many people manage to be outshone by Putin when it comes to PR. In the meantime it has long been clear that the Netherlands too cannot fight this virus alone. ... However a country that only makes unreasonable demands on others in times of need but can give nothing in return will one day find that it gets nothing more from the others either.”

Avvenire (IT) /

All a matter of culture?

The north-south conflict over the idea of European bonds is also a result of linguistic and cultural differences, Avvenire explains:

“There is no doubt that Protestant humanism emphasises the equivalence of culpability and debt more than Roman Catholic countries do. This applies to all kinds of debt, but above all to public debt. ... But if debts are culpable then the debtor (whether an individual or state) is also culpable. This old equation is also behind the rigidity with which Germany in particular has conceived, managed and guarded the relationship between debt and GDP in the Eurozone. And Germany has found a great ally in the Netherlands. Just as it is no coincidence that the 'Catholic' Italy, Spain and France are on the other side.”

La Vanguardia (ES) /

France's voice will be decisive

Spain's Foreign Minister Arancha González compared the current situation with the sinking of the Titanic, pointing out that there was no time to sort the passengers to be rescued into first and second class. Editor-in-Chief Jordi Juan takes up this metaphor in La Vanguardia:

“The comparison is not groundless. Europe is sinking while its leaders keep repeating the same old tune, just like the famous orchestra on the English ship. ... The countries of southern Europe are not prepared to say yes and amen to everything that comes from the powerful countries in the north. A decisive role could now be assumed by France, which always plays its own tune. The evolution of the pandemic in this country could now make Emmanuel Macron lean in one direction or the other.”

Financial Times (GB) /

Time for a coalition of the willing

France, Italy, Spain and the rest of the countries calling for corona bonds should not be discouraged by the resistance of other states, The Financial Times suggests:

“There is a way forward. They could set up a mutualised bond backed by themselves, in a coalition of the willing. They could then challenge the European Central Bank to buy these securities as part of its pandemic emergency purchasing programme. Legally, a mutualised debt instrument between a group of sovereign states would still count as national debt. The repayment obligation would be shared. This would not reduce the debt load of vulnerable member states in a way a properly designed EU-wide instrument could. But, at the very least, it would set a precedent, and raise some money.”

Efimerida ton Syntakton (GR) /

Time to set limits for Berlin

Germany's selfish crisis strategy must no longer be tolerated, demands Efimerida ton Syntakton:

“For Germany, the EU is a practical construction for disguising its protectionism by leading its EU partners up the garden path while making a show of solidarity. The rejection of Covid-19 Eurobonds is only the tip of the iceberg on which the EU sails from crisis to crisis. ... But since the iceberg is as old as the EU and its rules, the real problem isn't Germany or its deeply rooted economic nationalism. The problem is the others who tolerate it and accept that it 'infects' the EU institutions.”

La Repubblica (IT) /

Reluctance is understandable

Italy will have to come to terms with the fact that corona bonds remain a dream, warns economist Roberto Perotti in La Repubblica:

“Is it really surprising that the countries of northern Europe are so reluctant? In contrast to the crisis of 2011, they too are in the thick of it and face enormous uncertainty: it's unthinkable that they would even take the risk of a highly indebted country like Italy. No politician in a northern country could take responsibility for giving away or lending his taxpayers' money to Italy and then facing accusations that his own country needed this money. Italian politicians and commentators would do well to accept the reality once and for all.”

Dnevnik (SI) /

Self-sufficiency not the solution

Opposing a joint approach now means ignoring the risks of the pandemic, Dnevnik believes:

“In the coming weeks, EU heads of state and government should think about how ill-equipped they are to deal with the pandemic and its consequences without the Union, the ECB or the internal market. Perhaps this will help them achieve greater financial solidarity. The return to self-sufficiency is a nice idea. But in the globalised world - which isn't about to disintegrate with the pandemic - it's only one aspect of risk diversification.”

El País (ES) /

Fight recession with all means available

The EU must not waste its last chance, El País warns in its leading article:

“Europe is facing a severe recession due to the paralysis of production caused by the coronavirus. If the people's trust in the European Union is to be maintained and the EU is not to be completely discredited and even risk disintegration, the efforts of those in power to avoid this recession or at least minimise it must be far more ambitious and decisive than they have been so far. Consequently, the summit planned for tomorrow should activate all available mechanisms, including the urgently needed introduction of European public debt, the Eurobonds.”


Help Italy now

Tvxs also advocates joint bonds:

“It doesn't take much imagination to envisage what kind of interest rates the markets will soon be imposing on Italy, which has released 28 billion euros for immediate measures to fight the pandemic with plans to finance another 60 billion euros through loans, and whose public debt was already at 135 percent of GDP before the crisis. The only way out is with Eurobonds. ... The Conte government has already asked for this, and leading economists, including Merkel's advisers, are also calling for it, but once again the Berlin government is refusing to go along with this, as it already did during the debt crisis. ... So this is the answer of Economic Affairs Minister Altmaier to the request of Germany's partner country in Europe, which already has 6,820 coronavirus victims.”

Corriere della Sera (IT) /

Necessary in the long term

Sooner or later we'll have to think about Eurobonds and the mutualisation of debt, warns economic expert Lucrezia Reichlin in Corriere della Sera:

“But such steps can't be taken for granted, not least because of the historical differences between the EU countries in terms of their budget policies. ... After initial hesitation the ECB has now taken decisive action. It is once more proving to be the only institution that can act on behalf of the whole of Europe. Today the action taken by the ECB may suffice. But we should be aware that sooner or later the political actors must also assume responsibility. Because although the power of the Central Bank is immense, it is based on the support of sovereign states and the powers elected there. Without a broad political consensus, the ECB's ability to act will be limited.”