I would have never imagined that it would be this hard for some politicians to understand the difference between deciding to modify the rules of a treaty on financial assistance to member states and deciding to resort to it.
I would equally have never imagined to witness the level of confusion and comments triggered two minutes after reaching an agreement in the Eurogroup, by people who had not even read the text (nor understood it).
I must say that part of the press is also playing a part in this. I have read numerous misleading comments and headlines.
I will try to briefly clarify two points which many seem to have not clearly understood:
- Yesterday an agreement has been reached on the MODIFICATION of the ESM rules, not on the access of one or more member states to the programme. What is at the heart of this modification? The creation, within ESM, of a special line of credit dedicated to the Coronavirus emergency without any other condition if not that the available resources be dedicated to health direct and indirect expenditures. Even though Italy stated not to be interested in accessing such mechanism, it is important for the EU to have such a tool available.
- The bubble around “Goodbye Eurobonds”, “Coronavirus Failure” etc. is disarming. Yesterday three programmes have been agreed to that are financed through european bonds: how will 100 billion euros be raised for SURE? With european bonds emitted by the Commission. How does EIB raise 200 billion euros? With european bonds emitted by the EIB. How will the new EMS 240 billion programme for health expenditures be financed? With european bonds emitted by EMS. How will the Recovery Fund be financed? This will be decided by heads of government after Easter, but I find it difficult to imagine financing mechanisms that do not entail some form of european bonds (there are some drafts circulating and almost all revolve around the emission of bonds, with various denominations and structures).
It’s true: none of these bonds is named or will be named “Eurobond”, they will not be used to restructure the cumulated debt (Italy has never requested it) and they still do not have the breadth of scope we aim for (which we hope to achieve with the Recovery Fund). But they are european bonds guaranteed by resources of European Member States (either directly or indirectly through the EU budget) which will be needed to face the expenses related to the Coronavirus emergency.
These are the facts. When making considerations, please keep in mind that until two weeks ago there was nothing but ESM on the table. Today we have a wide package of measures and an open discussion on how to finance the Recovery Fund – a fund which until three days ago many countries did not event want to hear about. And all of this has been possible thanks to the tenacity and the diplomatic work of a great European country: Italy. That said, the battle continues and we hope to obtain even more, because additional steps will be necessary.
P.S. Please find below the Council’s communiqué with the details of the agreement: