European Union national leaders told the bloc’s finance ministers Thursday to draw up new measures to tackle the devastating economic impact of the coronavirus pandemic after failing to bridge major differences over how best to share the debt burden.
During six hours of talks by video conference, the leaders also called on the EU’s powerful executive arm, the European Commission, to draw up a strategy for resuscitating their choked economies once lockdowns and other health measures are lifted.
The talks came as the death toll in Europe from COVID-19 soared well beyond 13,000 people. Spain has just prolonged a state of emergency, while French President Emmanuel Macron launched “Operation Resilience,” a military-backed response to combat the illness.
“This crisis is exceptional and unique and requires a very strong answer,” EU Council President Charles Michel told reporters after the summit. Euro zone finance ministers will have to continue working and make proposals on tools “within two weeks,” he said.
In a joint statement, the leaders said those economic “proposals should take into account the unprecedented nature of the COVID-19 shock affecting all our countries.”
As the virus has taken hold, the Commission — the guardian of the EU’s rule book — has permitted unprecedented border and economic measures so that embattled member countries like Italy and Spain, but also many others, can save supply chains and businesses.
But while the leaders all acknowledge the extent of the crisis and the need to support Italy in particular, they are divided over whether to use every economic tool at their disposal now or keep something in reserve should a second wave of infections start.
Finance ministers from the 19 countries using the euro currency agreed in principle this week to letting partners in distress borrow up to 2% of their gross domestic product from the European Stability Mechanism, a bailout fund set up during the debt crisis a decade ago with lending assets of 410 billion euros ($444 billion).
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A group of nine nations wants the immediate rollout of “coronabonds,” shared debt backed by all euro zone countries. This would let even those hardest-hit borrow at sustainably low interest rates as their spending balloons on hospitals and measures to stop businesses going bankrupt.
That idea is anathema, though, to countries like Germany and the Netherlands, which have long objected to common borrowing because of the risk it leaves them holding the check for the finances of shakier countries and reduces incentives for other countries to control their deficits.
Looking forward, the leaders demanded an action plan to help their economies recover once the crisis is over.