March 27 (EIRNS)—Perhaps the biggest crisis since the existence of the European Union broke out yesterday, when Italy and Spain rejected the draft statement prepared for the European Union Council meeting yesterday. That draft statement had simply ignored a request forwarded by a front including Italy, Spain, France, Portugal, Ireland, Belgium, and Slovenia, for an EU-wide facility to provide emergency, unconditioned loans to member states hit by the coronavirus crisis and its effects on the economy. After six hours of discussion, the decision was taken to explore new options and discuss them in two weeks.
According to Die Welt, Merkel “was irritated by Italian Prime Minister [Giuseppe] Conte’s aggressivity.” Germany, the Netherlands, and Austria had insisted that EU member countries in need should go to the infamous European Stability Mechanism (ESM) and accept its conditionalities. Conte reacted by saying that “If anyone thinks about personal protection equipment, they can keep them for themselves. Italy does not need them: Our accounts are okay.”
As Conte and Spain’s Prime Minister Pedro Sánchez went on the offensive, French President Emmanuel Macron kept silent, giving the impression that this was a pre-arranged scheme. The meeting threatened to crash, until the proposal was accepted to meet again in two weeks.
Even liberal, pro-EU mouthpieces such as Die Zeit acknowledged that this meeting might have marked the end of the European Union. “A community that drops its members in trouble is not worthy of its name,” Die Zeit scolded.
Italian opposition leader Matteo Salvini commented: “They gathered in Brussels and decided to decide in two weeks. They do not understand that people are dying. It stinks.”
From the standpoint of Germany and others, they “fear that the corona-bonds will eventually become Euro-bonds, and a temporary common fund at the end becomes a lasting one. This would be the start of an uncontrolled debt-economy.”
But let it be clear: The proposal for EU bonds is wrong, it is doomed to fail and is useless. The European Central Bank (ECB) has just announced that they will drop constraints on sovereign debt purchases, allowing purchases beyond 30% of national debt and below investment grade. This means that Italy, Spain, Greece, and others can potentially issue new debt which the ECB will buy on the secondary market. EU Commission President Ursula von der Leyen said on March 21, announcing the lifting of deficit constraints, that EU member states can now “pump as much as they want” into the economy.
So, why insist on the Eurobonds scheme? Critics say that its proponents see it as a tool to force through the creation of a supranational debt and a supranational government.