Former Italian Prime Minister Mario Monti and former WTO Director General Pascal Lamy of France on Thursday 9 April called for a joint issue of debt at the European level to revive the economy paralysed by the COVID-19 pandemic, while the Eurogroup was reconvened to complete the European Union’s anti-crisis fiscal and financial arsenal.
Mr Monti has signed an appeal by German and Italian personalities in favour of issuing European health bonds to share the fiscal burden of health spending and economic recovery (see EUROPE 12460/22). “These obligations are unlikely to come into being now”, but rather “in the future”, once public opinion in some countries has been persuaded, said the former EU Competition Commissioner in an online debate organised by Friends of Europe.
“History repeats itself”, Mr Monti noted, referring to similar opposition from countries such as “Germany, the Netherlands, Austria and Finland”, which, as in 2012 during the sovereign debt crisis, are reluctant to take the step towards greater fiscal union at the European level.
According to him, the Italian government would be “unwise” to refuse to activate credit lines from the European Stability Mechanism (ESM), the euro area’s permanent rescue fund, if the conditions attached are “very light” and do not provide for monitoring by the ‘troika’.
Mr Lamy ranked the COVID-19 pandemic among events that change the world, such as the attack on New York’s Twin Towers “on 11 September 2001” and the “fall of the Berlin Wall”. Referring to the ECB’s €1.5 trillion budget allocation to tackle the socio-economic crisis, he asserted that only a “strong joint operation” will be able to meet the challenge.
“I am in favour of ‘coronabonds’” as an extraordinary and temporary initiative, said the former EU Trade Commissioner, differentiating them from Eurobonds, a taboo term in Germany and the Netherlands. Going further than Mr Monti, he said that this joint European issue of debt could take place without Germany as a first step.
In an interview with Le Parisien newspaper, however, ECB President Christine Lagarde advised against becoming fixated on ‘coronabonds’. “A form of debt pooling already exists through the ESM, the EIB, and the loans that the European Union can take out”, she said. But she did not rule out the creation of a “reconstruction fund focused on greener and more digital growth”.
Mr Monti and Mr Lamy also advocated a recasting of the EU’s strategic agenda in light of the lessons learned about the Twenty-seven’s ability to deal with the pandemic. Both believe that the EU budget for 2021-2027 will need to be strengthened and further oriented towards a socially and environmentally sustainable recovery. (Original version in French by Mathieu Bion)