For the third time in 2 weeks, the Heads of State or Government of the European Union took stock, on Thursday 26 March, of the emergency measures taken to deal with the coronavirus pandemic.
After more than 6 hours of sometimes stormy discussions, the Twenty-Seven gave a mandate to the President of the European Council, Charles Michel, and the European Commission to prepare a European Economic Recovery Plan and an exit strategy from the crisis that will allow a concerted and gradual return to normality.
This plan and strategy will consider “all available tools” at European level, Mr Michel said, citing the European budget and the European Investment Bank. In their statement, the EU leaders call on the finance ministers to consider all possibilities to increase the EU bank’s support for the economy.
According to the President of the Commission, Ursula von der Leyen, the exit strategy will make it possible to coordinate when and how a return to normality will be possible, based on scientific advice; for example, when it will be possible to lift the obligation of social distancing.
On the health front, the Twenty-Seven also believe that it is time to set up a more ambitious crisis management system within the EU.
As for the immediate fight against the virus, Ms von der Leyen said every effort is being made to ensure that medical equipment can be reproduced “simply and cheaply”. She also pointed to the ongoing group purchases. The latter is key, according to Czech Prime Minister Andrej Babiš, as Chinese equipment bound for Italy was recently intercepted in his country.
The lowest common economic denominator
At the centre of the discussions were the budgetary options still available to avoid an economic collapse, with the Twenty-Seven promising to do what is necessary to overcome the crisis.
The final declaration makes no mention of the possible mobilisation of the European Stability Mechanism (ESM), the permanent rescue fund for the euro area with an intervention capacity of €410 billion, which could grant credit lines to solvent euro-area countries but which lack liquidity (see EUROPE 12453/1).
The Eurogroup was asked “to continue the intense work” and to make concrete proposals “within 2 weeks”, Mr Michel simply stated.
Broadly speaking, the most affected southern European countries – such as Italy and Spain – are calling for all euro-area countries to be able to benefit from ESM credit lines without conditions, while the northern countries fear budgetary complacency in these countries, which are already having difficulty stabilising their public finances in periods of growth.
“We must also do our utmost to help our economies and stabilise markets. The ESM is the right instrument for this”, said Austrian Chancellor Sebastian Kurz. The ESM is also “my favourite instrument, because it was really created for times of crisis”, said German Chancellor Angela Merkel, assuring that the question of conditions for aid had not been addressed.
Although discussed, the issue of specific bonds on behalf of the Member States is far from reaching a consensus.
The day before, however, nine Member States had advocated the development of a common debt instrument (see EUROPE 12454/1). Among these countries is Italy, the country so far hardest hit by the pandemic. Its Prime Minister, Giuseppe Conte, criticised the lack of ambition of his counterparts and threatened to reject the declaration, considering it too timid when stacked against these high stakes. The two-week deadline set for the Eurogroup to make proposals is, moreover, an Italian idea supported by Spain.
The nine countries were joined on Thursday by the President of the European Parliament, David Sassoli, according to whom “we need to invent new instruments of solidarity”. Responding to this crisis will be very costly and will require “a European sharing of debt”, he said.
But Germany and the Netherlands are not ready to take such a step. According to these two countries, the red lines have already changed enormously over the last 10 days, during which the Stability and Growth Pact has been frozen and the ECB has announced the PEPP operation for the massive buy-back of public and private securities endowed with €750 billion.
“I cannot foresee any circumstances in which the Netherlands would accept Eurobonds”, said Dutch Prime Minister Mark Rutte, describing even the granting of credit lines by the ESM as a “last resort” solution. Hence the position of the Twenty-Seven, which, according to him, constitutes “the lowest common denominator”.
Lastly, the European Council drew up a list of emergency measures already adopted in the budgetary (unprecedented freezing of the Stability and Growth Pact, see EUROPE 12452/1), economic (relaxation of European rules on state aid, see EUROPE 12450/6) and monetary fields (the ECB’s PEPP operation, see EUROPE 12450/7).
Enlargement. The Heads of State or Government also endorsed the EU Council agreement on the opening of EU accession negotiations with Albania and North Macedonia (see EUROPE 12454/31, 12453/20). However, no date has been announced for the first intergovernmental conferences, as Albania has to fulfil additional conditions before the conference can be convened. The Commission’s new methodology for the accession process of the Western Balkan countries was also approved (see EUROPE 12419/2).
Migration. Finally, the Twenty-Seven briefly discussed the migratory tensions observed at the Greco-Turkish borders. They expressed their “concern” and “full solidarity with Greece, as well as with Bulgaria and Cyprus and other Member States which are also affected” and supported their “efforts” to manage the EU’s external borders.
See the Declaration of the Twenty-Seven: https://bit.ly/33LN0Vk (Original version in French by Mathieu Bion, Camille-Cerise Gessant, Solenn Paulic and with the editors)