Von der Leyen apologises to Italy but baulks at ‘coronabonds’

File photo. EU Commission President Ursula Von der Leyen and Italian Prime Minister Giuseppe Conte (R) during the second day of the European Council summit in Brussels, Belgium, 13 December 2019. [Olivier Hoslet/EPA/EFE]

European Commission chief Ursula von der Leyen told Italy on Thursday (2 April) that European nations were ready to help it deal with the coronavirus after initially focusing on “their own home problems”.

But the EU leader stopped short of agreeing to Rome’s request for the bloc to start issuing joint debt — dubbed “coronabonds” — that could let countries such as Italy address the crisis more cheaply.

“Today Europe is mobilising alongside Italy. Unfortunately, this has not always been the case,” von der Leyen wrote in Italy’s La Repubblica newspaper.

“It must be recognised that in the early days of the crisis, in the face of the need for a common European response, too many have thought only of their own home problems.”

Von der Leyen’s letter opened with an apology but ended with a list of the various ways the EU was already helping Italy deal with the economic consequences of its three-week lockdown.

Italy has extended its closure of businesses and ban on public gatherings until 13 April to help stem infections that have already claimed a world-leading 13,155 lives.

Von der Leyen said the EU “will allocate up to €100 billion to the hardest hit countries, starting from Italy, to compensate for the reduction in the wages of those working on shorter hours.”

She said the newly agreed initiative provides “loans guaranteed by all member states — thus demonstrating European solidarity”.

Von der Leyen concluded by proposing that “every euro still available in the EU’s annual budget be spent on tackling the crisis”.

“In the past month, the European Commission has left no stone unturned to help Italy,” she wrote.

Spain and France — two fellow high-spending nations with rapidly climbing COVID-19 tolls — have backed Italy’s plea for the new common debt instrument.

But more spendthrift states such as Germany and the Netherlands oppose the idea.

Common debt instruments can theoretically dilute risk and lower the borrowing costs of indebted countries while slightly raising those of nations spending within their means.

EU leaders failed to find a common response last week and gave their finance ministers until next Thursday to draft a new strategy.

Leaders clash over stimulus against pandemic, pass hot potato to Eurogroup

EU leaders on Thursday (26 March) continued to disagree over the economic response to the coronavirus as Northern countries rejected the idea of issuing joint debt, known as “corona bonds”, proposed by nine member states to finance the recovery.

Prime Minister Giuseppe Conte said this week that Italy could agree to tap the European Union’s emergency war chest, the EMS, if its accompanying strict spending rules were dropped.

“If we are a union, now is the time to prove it,” Conte wrote in Germany’s weekly Die Zeit.

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