Italy and Spain against Merkel-Germany

It recalls the darkest hours of the euro crisis: Similar to ten years ago, the EU leaders are unable to agree on how to proceed with economic and financial policy in times of corona crisis. Italy and Spain stand against Chancellor Merkel – they ask for more solidarity.

The EU summit was to last two hours only – and then dragged on for another four hours. The 27 leaders got bogged down in the question of whether there should be more financial solidarity in the corona crisis, which claims hundreds of lives daily.

Even before the summit, nine membr states had spoken out in favour of such solidarity – for example in the form of joint bonds (“corona bonds”) – including France, Italy and Spain, but also Belgium and Luxembourg.

The usual suspects were against it: Germany, the Netherlands, Finland and Austria. It was exactly the same north-south schism as in the euro crisis – only this time the southern camp was larger and more offensive and could not be fobbed off.

Italy’s Prime Minister Conte, in particular, made a tough showing. While the summit was still in session, he published a declaration. “We must respond with innovative financial instruments,” it said. Italy and Spain would give the EU ten days to do so.

It was a coup that was reminiscent of the June summit in 2012. At that time, Italy and France had pushed through the banking union in a night session – Chancellor Merkel initially gave in, but has since then systematically delayed implementation.

Eight years later, it was Merkel once again who refused to show solidarity. At best, she wants to use the euro bailout fund ESM, which is headed by the German K. Regling – and if possible only grant loans that have always been subject to strict conditions.

Conte and Merkel failed to find a compromise on Thursday. In order to prevent the summit from breaking down, the euro finance ministers have been instructed to draw up new “proposals” for supporting crisis countries within two weeks.

This did save some time. But the crisis has not been solved – quite on the contrary: Now Italy and Spain, which have been hit hardest by the corona crisis and fear the pressure from the markets, stand against Merkel-Germany.

Why am I writing about “Merkel-Germany” when other countries are also against corona bonds and Community aid? Well, if Merkel were to give in, the Netherlands and Austria would probably also have to give in.

Moreover, not all Germany is opposed to financial solidarity in this terrible crisis. The Left, the Greens and at least the European SPD have spoken out in favour of coronabonds. Now it is up to Finance Minister Scholz.

If Comrade Scholz resists the temptation to give the new Schäuble, the tide could still turn. But if Scholz sticks to his No, the whole of Germany could soon be back in the dock, as it was in the euro crisis…

Translated with (free version) The original version (in German) is here