The EU crisis

Corona Bonds: Administer with Caution

By Sergi Cutillas, Albert Medina,
Pablo Cotarelo, Marc Lascorz
Once again, the Covid-19 crisis has exposed the Eurozone’s weaknesses. Faced with the extraordinary expenditure that the different countries will have to make to counter this crisis, the question once again, as in 2010, is: how will this be paid for? Or more specifically, who is paying for it?
Faced with this question, different proposals are already emerging with various mechanisms for sharing costs to a greater or lesser extent. Despite the fact that Peter Altmaier (German Minister of Economy) has already ruled them out, around these proposals the concept of Euro bonds is once again emerging. There is a very broad spectrum of what this policy should look like, for some it means one thing and for others something completely different.
Traditionally, from the European Left, the concept is considered progressive and there has already been a collection of signatories (here) to demand them, with a text so unspecific that it is impossible to know the implications of what was actually signed, opening the door to proposals that would only deepen the crisis. To date, three proposals seem to have prevailed in the debate, the result of which will mark the future of the lives of tens of millions of people in Europe.

Italian PM warns EU could collapse over pandemic debts

9 Apr 2020
Italian Prime Minister Giuseppe Conte has said the European Union might collapse as a project unless it acts decisively to help countries worst-hit by the coronavirus outbreak.
Italy has been pushing for a co-ordinated economic response from the EU by allowing counties to share debt, but the proposal is opposed by Germany and The Netherlands.
In an interview with the BBC, Mr Conte said the scale of the problem should not be underestimated.
Italian banks especially face a torrid time as they have the highest exposure to small businesses in Europe, including already struggling firms that may slide into default in the harsh recession expected to follow the pandemic.

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The European Union still refuses to confront the coronavirus crisis

ONE measure of the stability of the capitalist system is the profitability of its banks. This is so important a priority for our ruling class that it rescued them with unimaginable mountains of cash — our cash — in the fallout from the 2008 financial crisis.
Even so banks remains a weak link. For banks across the Eurozone, according to figures from the European Central Bank, the average return on equity fell over the past year from 6.2 per cent to 5.2 per cent.
In the dominant EU economic power German banks had a return of 0.08 per cent.
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Germany’s left-wing political parties are exploiting coronavirus crisis to push their political agenda

BY Rainer Zitelmann
8 April 2020
Germany has three major left-wing parties – the SPD, the Left, and the Greens. Each of them has declared that they are in principle prepared to form a coalition government with one another after the next federal elections. Yet, from their statements on the current pandemic, it is clear that all three parties of the left have little to offer in terms of specific proposals for overcoming the corona crisis. Instead, they are exploiting the current outbreak to reassert their longstanding anti-capitalist agendas.
The Social Democratic Party, the SPD, is currently the junior coalition partner in Angela Merkel’s CDU/CSU-led government. They have increasingly drifted from the political center ground to the hard left in recent years, undergoing a development much like that of the Labour Party in Great Britain under Jeremy Corbyn. Yet, ironically, the SPD also shed many of its traditional voters to the Greens in elections and polls last year.
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France hints at EU coalition of willing to issue joint debt

Apr 9, 2020
France is not ruling out the idea of issuing debt with other European countries and could set up a coalition of motivated countries in the event of a German veto, an Elysian source told Reuters agency. The idea of a coalition initially floated by Pascal Lamy could yet make its way.
While the Eurogroup is divided over the management of the health crisis, France supports the need to back Europe’s economies hardest hit by the coronavirus crisis such as Spain and Italy, which are also among the most indebted countries in Europe.
France cannot understand the German stance while the Dutch government is still at odds with Italy over the European Stability Mechanism’s (ESM) conditionality. In addition, what’s the position of European Commission Vice-President Margaritas Schinas on the issue?

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Europe’s future is at stake in this war against coronavirus