Eurogroup compromise on COVID-19 response

Voiced by Amazon Polly

The third Eurogroup of the last few weeks ended with a fragile compromise, which does not solve the problem of rebuilding the European economies overwhelmed by the coronavirus crisis.

The agreement reached by the European Union’s finance ministers on Thursday evening sounds like a tactical armistice, unable to say anything about how the Twenty-Seven will try to really and jointly face the costs of reconstruction. In fact, it concerns only short-term measures and at the end of the day brings into play a trivial sum if compared with the theoretical ‘firepower’ boasted by an economic bloc worth over €18 trillion.

There are 200 billion for businesses earmarked by the European Investment Bank, 100 billion allotted by the Commission to avoid layoffs and 240 billion pledged by the European Stability Mechanism (ESM), which can only be used for direct or indirect health-related expenditure “in compliance with the ESM Treaty”. A deliberately ambiguous formula, which is the product of the compromise between Italy and the Netherlands, and behind which lies the deep and apparently overwhelming rift between the North and South of the EU.

On the one hand, the austerity front of Germany, the Netherlands, Austria, Finland, Sweden and Denmark. On the other, that of the redistribution speared by France and Italy, with a cautious Spain directly behind. A fault line described by recent chronicles as a mere taxation issue, but which today more than ever takes on the features of a cultural and anthropological clash. The product of ancestral customs, far more meaningful than the worthless Brussels’ rules which, in the midst of the worst economic crisis in its history, forced the EU to function in the same way as ever. That is, by deciding not to decide, while the need to reconcile irreconcilable positions produced results that were only improvised and weak.

The Italian government returned home claiming victory, stating that the Eurobonds are still on the table and betting on the “temporary recovery fund” wanted by Paris which will be discussed next week, while the Dutch counterpart was free to do the opposite, swearing to its electors that debt sharing procedures will never be discussed.

For our government, the internal political repercussions are ready to emerge. More than the foreseeable avalanches of criticism from opposition parties, the reaction of the M5S parliamentary group, that compose the bulk of the current ruling majority, is of particular interest. After long shouting against the ESM and the spectre of Italy being forced to comply with European fiscal rules, the 5Stars are in fact called to accept yet another compromise in their troubled ruling history at Palazzo Chigi.

UTOPIA Weekly Report 10-04 ENGMeanwhile, the sense of urgency is growing day by day, as well as the feeling of having been left alone by Europe. Opinion polls indicate that Italy see France and Germany as its main rivals, while China and Russia have surpassed the US in the friends ranking (see SWG survey, March 25-27). This is also reflected in the choices made by the Italian institutions, with the veto power on foreign acquisitions (the so-called golden power) extended for the very first time also to EU members. It’s about a more than obvious consequence of the fracture registered in intra-European trust, with Italy now openly attacking the myth of the preferential treatment to be reserved for other EU members.