Business The Hague's inflexibility denounced by Paris after the failure...

The Hague’s inflexibility denounced by Paris after the failure of a meeting

Brussels (AFP) – A marathon meeting of EU member states to find a common economic response to the coronavirus ended Wednesday on a failure, The Hague in particular refusing to give in to requests from southern countries, an attitude denounced by Paris.

“After 16 hours of discussion, we have come close to an agreement, but we are not there yet,” could only see Wednesday morning Mario Centeno, president of the Eurogroup, the body that brings together the ministers of finance in the euro area.

He convened a new meeting by videoconference Thursday from 5:00 p.m. (3:00 p.m. GMT), which too is likely to drag on in the face of the inflexibility of the Netherlands.

The president of the European Central Bank (ECB), Christine Lagarde, put pressure on Wednesday evening on the members of the euro zone so that they agree. “It is vital that the budgetary component in response to this crisis is sufficiently powerful throughout the euro area. Governments must be side by side to deploy optimal policies together in the face of a common shock for which no one is responsible” , she wrote in a forum posted by French daily Le Monde.

The failure of the ministers on Wednesday follows that of a European Council of Heads of State and Government on March 26, which had seen countries in the north and the south clash on the economic response to be brought in the face of the announced recession.

A new failure would weigh heavily on the unity of the euro zone and return the ball to the heads of state and government.

The blockage in the Netherlands was denounced by the French presidency. Other European sources had previously attributed to them the failure of the meeting by their refusal to give in to Italian demands on loans likely to be granted to states in difficulty by the euro zone relief fund.

– An “incomprehensible” blocking –

The blocking of the Netherlands on the European Stability Mechanism (ESM) is “counterproductive, incomprehensible and cannot last”, accused the French presidency.

The blockade “cannot be accepted”, it was added, expressing the hope of greater flexibility for this country by Thursday.

Ministers propose that the European Stability Mechanism (ESM), created in 2012 during the eurozone debt crisis and funded by member states, can lend money to a state in difficulty up to a maximum of 2% of its GDP, or up to 240 billion euros for the whole of the euro zone.

The option is rejected by Italy, the European country most affected by the epidemic (more than 17,127 dead), as long as these loans are accompanied by conditions such as requests for reform, which The Hague requires.

“The use of this budget must be accompanied by certain conditions”, especially “in the long term”, had insisted the Dutch Minister of Finance, Wopke Hoekstra, even if “an exception” can be considered if it is for example to “cover health costs”.

According to a European source, The Hague is supported by Austria, Sweden, Denmark and, to a lesser extent, Finland.

– Laxity –

Faced with the impasse, the Italian Minister for the Economy, Roberto Gualtieri, called for solidarity. “It is the moment of common responsibility, of solidarity and of courageous and shared choices,” he argued in a tweet on Wednesday.

Besides using the MES, discussions remained difficult on the creation of an instrument to revive the economy after the epidemic.

The countries most affected by the virus, in particular Italy, claim that it can be financed by common debt, in the form of eurobonds sometimes called “coronabonds” or “eurobonds”.

Among these countries are also Spain and France, as well as Greece, Malta, Luxembourg or Ireland, according to concordant sources.

However, the pooling of debts constitutes a red line for Berlin and The Hague, which refuse to engage with highly indebted states in the south, deemed lax in their management.

The German and Dutch ministers camped on this position after the meeting, Wopke Hoekstra in particular believing that “eurobonds” would create “more problems than solutions”.

A revival is possible “with very conventional instruments” and already existing “such as the budget of the European Union”, declared the German Minister, Olaf Scholz.

A European source stresses however that “the” coronabonds “were not the problem” during this meeting.

The other two areas of European response to the virus have been more consensual.

The first aims to create, via the European Investment Bank (EIB), a guarantee fund that would mobilize up to 200 billion euros for businesses.

The second consists in validating the European Commission’s plan to create an instrument to guarantee up to 100 billion euros maximum for national short-time working plans, reinforced or created due to the epidemic.

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