The MEPs on the European Parliament's Economic and Financial Affairs Committee (ECON) are preparing to comment on the emergency European economic and budgetary measures that have already been taken and want to take part in the reflection on new instruments to tackle the COVID-19 pandemic.
We are organising “hearings” with European Commissioners - Margrethe Vestager, Paolo Gentiloni, and Valdis Dombrovskis - and representatives of European bodies, but unfortunately these exchanges will not be in public because the technology does not allow it, Sven Giegold (Greens-EFA, Germany) told EUROPE on Thursday 26 March.
Jonás Fernández (S&D, Spain) confirmed that the ECON committee coordinators met virtually this week and will do so again next week, with the aim, in his words, of “keeping busy” and “contributing to the debate” taking place at EU level.
Discussions include the options explored by the Eurogroup to strengthen economic lines of defence, including the possibility of the European Stability Mechanism (ESM), the rescue fund for the euro area, granting ECCL credit lines. On Thursday evening, EU leaders gave their finance ministers two weeks to come up with new proposals (see EUROPE 12455/1).
Luis Garicano (Renew Europe, Spain) said that the “easiest way” to act was to mobilise the ESM by means of a new instrument. The instrument would be open to all euro area countries so as to avoid “stigmatisation” of recipient countries, which would be subject to strict reform conditions and a return of the ‘troika’.
The Spanish MEP called for a real budgetary “rocket” of around €500 billion (€50 billion for health systems, €250 billion in bank guarantees, €175 billion for funding temporary work) to show the markets that the Nineteen will not tolerate fragmentation of the euro area.
Giegold rejected the idea of “austerity” being imposed on countries that apply to the permanent rescue fund, and expressed the hope that a position would emerge in the ECON committee in favour of deploying even “bolder” instruments. In his opinion, a contribution from the ESM fixed at 2% of the GDP of each recipient country will not be sufficient.
He mentioned the possibility of greater EIB involvement in strengthening the “safety net” that national development banks, such as the German bank KfW, are putting in place in countries with lower levels of financial resources. “Italy, for example, cannot afford this”, he said.
Fernández believes that “other instruments and other bodies” must be considered, because the real problem will arise after the pandemic, when States will have to demonstrate economic recovery despite already being heavily indebted as a result of the pandemic.
“The American states needed a civil war to share their debt. If we are really dealing with a war against the coronavirus, then we have to make innovative decisions”, he argued, and predicted a political majority in the ECON committee for opening up “new perspectives”.
‘Coronabonds’. The idea of a common bond issue is on a number of minds, especially in countries that are paying a heavy price. Countries that advocate budgetary orthodoxy, however, such as Germany and the Netherlands, do not want to hear such talk.
Some fear that this could lead to fears in Germany that a Eurobonds issue, which would be considered safe, might compete with a German Bunds issue, considered the safest of safe haven securities in Europe, at a time when Germany is also preparing to borrow heavily on the markets to finance its fight against the epidemic.
Giegold is not adverse to the idea of joint bond issues. But it makes no sense to introduce a common liability if it is not accompanied by a right of oversight over the expenses that are incurred. “The two go together”, he said.
Garicano believes that the legislative proposal to create a market for sovereign bond-backed securities (SBBS) is another rapid action option, if there is the political will in the Council of the EU (see EUROPE 12237/14).
Issuing securities in this way, which would involve a diversified basket of euro area sovereign bonds distributed according to their economic weight, would not lead to a pooling of risks between euro area countries.
Will MPs be able to make transparent recommendations beyond these ongoing exchanges? According to information we have received, the Renew Europe group will try to convince the other pro-European political groups of the need for the European Parliament to take an official position on the European response to the crisis in the areas of health, economics, budgets, and security. The group’s President, Dacian Cioloș, said on Friday 27 March that a plenary session, to be convened in mid-April, might be an opportunity for the European Parliament to make its voice heard (see EUROPE 12456/14).
“The Renew Europe group will encourage the other groups towards a joint resolution”, said a parliamentary source, as the group is convinced that “the European Commission needs the support of the Parliament to put pressure on some Member States”. (Original version in French by Mathieu Bion)