Efforts by European Union (EU) finance ministers to strike a deal on a package of coronavirus-related fiscal measures ended in disarray early on Wednesday, with talks due to resume later this week.
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After 16 hours of discussions that began on Tuesday afternoon, “we came close to a deal but we are not there yet,” Mario Centeno, head of the Eurogroup of eurozone finance ministers, wrote on Twitter.
He added that the talks would resume on Thursday.
The ministers were debating a trio of proposed measures with a joint firepower of around half a trillion euros (540 billion dollars).
These consist of a precautionary credit line from the eurozone’s bailout fund, the European Stability Mechanism (ESM); a guarantee fund from the European Investment Bank for business liquidity; and EU support for the salaries of workers who would otherwise be laid off.
However, a more controversial element – championed by Italy in particular – was the insistence on common debt issuance, frequently referred to as coronabonds, as a tool to overcome the major economic contraction anticipated across the bloc this year.
EU leaders had given the finance ministers two weeks to agree on a set of proposed measures, at a summit on March 26 at which they were unable to reach a compromise on the thorny issue.
By Wednesday morning, EU diplomats reported that German Finance Minister Olaf Scholz and his French counterpart Bruno Le Maire – representing opposing camps in the debate – were in agreement on the way forward.
However, Italy remained insistent that any ESM disbursement must come without any of the usual conditions attached, while refusing to give way on the issue of joint bonds.
These demands are anathema to the Netherlands in particular.
“In these difficult hours, Europe must stand together closely.
“Together with (Le Maire), I therefore call on all euro countries not to refuse to resolve these difficult financial issues and to facilitate a good compromise – for all citizens,” Scholz tweeted on Wednesday.
Meanwhile, his Italian counterpart Roberto Gualtieri called on the ministers to step up to the challenge of COVID-19.
“It is time for common responsibility, for solidarity and for bold and shared decisions,” he wrote on Twitter.
Many see the division over coronabonds, which echoes the north-south divide that emerged during the eurocrisis, as a more fundamental schism between different European value systems.