EU ministers agree to a half-trillion euro bailout plan

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By Jan Strupczewski and Gabriela Baczynska

BRUSSELS, Apr 9 (Reuters) – European Union finance ministers agreed on Thursday to support half a trillion euros for their economies hit by the coronavirus, after weeks of disputes that revealed painful divisions within a bloc that is heading into a harsh recession.

Germany and France raised their voices to end opposition from the Netherlands, which sought to set economic conditions for emergency loans, and then to give Italy assurances that the bloc would show solidarity.

But the agreement does not mention the joint issuance of debt to finance the recovery, something that Italy, France and Spain have advocated, but which is not acceptable to Germany, the Netherlands, Finland and Austria.

The bloc’s 27 national leaders are only asked if “innovative financial instruments” should be used.

French Finance Minister Bruno Le Maire said that Europe has agreed on the most important economic plan in its history.

On Thursday morning, Italian Prime Minister Giuseppe Conte warned that the very existence of the EU would be threatened if it could not unite to combat the pandemic.

For weeks, EU member states have worked to present a united front in the face of the pandemic, arguing over money, medical equipment and medicines, border restrictions and trade restrictions, in talks that exposed bitter divisions.

German Chancellor Angela Merkel had spoken by phone with Conte and Dutch Prime Minister Mark Rutte on Thursday, paving the way for a deal, which will now be addressed by heads of government in a joint videoconference in the coming days.

Merkel said she agreed with Conte on the “urgent need for solidarity in Europe, which is going through one of its most difficult hours, if not the most difficult.”

The German chancellor made it clear that Berlin would not accept the joint debt issue, but said there were other financial avenues available.

Authorities said Merkel also asked Rutte to stop blocking the deal, in order to offer a safety net for governments, companies and people against the deep recession that the pandemic is expected to cause.

“Germany’s perception is that everyone has already made enough gestures to their domestic audiences. It is time to join,” said a senior EU official in Brussels.

Discussions have been crossed by the division between the fiscally more conservative north and the indebted south, which has been the most affected by the pandemic.

The package would bring the EU’s total fiscal response to the epidemic to 3.2 trillion euros (3.5 trillion dollars), the largest in the world.

(1 dollar = 0.9205 euros)

(Report by Jan Strupczewski and Gabriela Baczynska; Additional report by Michelle Martin, Toby Sterling, Joseph Nasr and Francois Murphy; Edited in Spanish by Javier López de Lérida)

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