Commitments to ESM loans remain. How Italy left with almost “empty hands”. The action of the Netherlands as “hare” and the colpo Grosso of Germany. Apocalyptic background for the conference call of the I.O.C.
The position of the Franco-German axis seems to have finally been chosen as a last resort for the Euro group. After three days of intense but scarce negotiations, the finance ministers of France and Germany put on the euro group’s table a seven-year plan to restructure the Eurozone economy, following the end of an alarm from the coronavirus.
This plan was in the Germans’ mind from the outset and with the help of the French, it is expected to be put on the table of EU heads of state as the medium-term solution, replacing the Eurobond.
In the dramatic tones of Euro group president Mario Centeno, the Euro group came up with what the hard-liners had put on the table from the start and which the Euro2day.gr revealed from last Tuesday. In other words, almost no negotiation was made. Once again, pressure has been exerted on the country that has “rebelled” to retreat. This time it was Italy.
If you read the positions of Tuesday’s Euro group on the measures, they will find that they are the ones announced last night. Even if M. Centeno said last night that the original proposals were a long way from the final.
The Euro group proposes a package of 540 billion of measures from loans through the European Support Mechanism (ESM), the Commission and the EIB. In conjunction with the ECB, the package, according to the President of the Euro group, must convince the markets that the Eurozone is being shielded immediately, as it adds up to many trillions of euros.
The Marshall Plan of the Franco-German axis
The substance, જોકે, lies not in the immediate measures but in the medium term. As is the process, the Eurogroup’s decisions will return for final negotiation or ratification to the leaders of EU member countries. They will also decide how to roll out the new innovative tools to support economies after the coronavirus crisis.
Cross-referenced reports that Paris and Berlin waited until the last minute to put on the table a plan with a French name (European Solidarity Fund) but German logic. A ‘Marshall-type’ project, which of course will not be free assistance for the Member States.
Chancellor Angela Merkel has already mentioned this new tool in statements before the Eurogroup begins. German Commission President Ursula von der Leyen, who proposed that the EU’s 7-year budget be transformed into a Marshall Plan, also spoke unsuspectingly. Her statement went “in the change”, but is now expected to return to the spotlight, as it appears to coincide with Ms. Merkel’s logic.
It will be interesting to see the terms and conditions of such a plan, as it is a common secret that several EU countries will need billions to reshape their economies, so they will need to make use of the extraordinary and medium-term tools.
While the Eurogroup was “negotiating,” the Fed on the other side of the Atlantic was announcing extra loans of $2.3 trillion, while ECB President Christine Lagarde was talking about “cataclysmic events” to follow.
Markets are expected to turn again to the ECB for new announcements, at a time when EU leaders will be asked to finalize the medium-term tools. The question that is still hovering in the air is what happens if some countries recover faster than others and “see” the effects of the crisis as an “opportunity” to expand (and buy at distress prices) to countries that have been hit hard.
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