European Union ministers make another attempt at contested fiscal coronavirus package

European Union ministers make another attempt at contested fiscal coronavirus package

European Union finance ministers were mired in marathon talks on Wednesday unable to bridge differences on how to rebuild their economies after the coronavirus, with a North versus South split on burden-sharing for hard-hit countries.

Italy and the Netherlands clashed over the conditions for Eurozone credit for governments that are fighting the worst of the economic effects caused by the pandemic.

The sting was made all the painful after Italy and Spain were forced to sideline their goal of a joint borrowing instrument, now dubbed coronabonds, due to the opposition of Germany, the bloc's most powerful member state.

Mario Centeno, the head of the Eurogroup of eurozone finance ministers, indicated earlier this week that there was broad consensus for these measures, but after 16 hours of overnight talks starting on Tuesday, the devil remained in the details.

They had hoped to agree on a half-trillion-euro program to cushion the economic slump and finance recovery from the pandemic, and turn a page on divisions over how far to go that have marred relations as the bloc struggles with the outbreak. "The Dutch say "no".

The European Union faces an existential threat if it can not come together to combat the coronavirus crisis, Italy said on Thursday as the divided bloc sought to salvage talks on a rescue package to aid battered economies.

"I have confidence that (German Finance Minister) Olaf Scholz, together with his colleague (French Finance Minister) Bruno Le Maire, can push this forward today and we are all working on that together", he said.

For a safety net for countries, the EU's rescue fund European Stability Mechanism has proposed precautionary credit lines of up to 240 billion euros to ensure all countries have adequate resources to respond, he said.

Granting the European Funding Financial institution 25 billion euros of additional ensures so it may step up lending to firms by an additional 200 billion euros is an alternative choice.

The package, which would bring the EU's total fiscal response to the epidemic to 3.2 trillion euros - the biggest in the world - includes steps that can be taken now and plans to support a recovery later.

Several European countries have reported some of the highest infection rates and death tolls from coronavirus, as Italy and Spain have each topped 130,000 confirmed cases and 14,500 deaths, according to the Johns Hopkins University tracker.

Other elements of the package being discussed are more guarantees for the European Investment Bank to back up companies and a scheme to help subsidise wages across the bloc so that companies can cut work hours instead of jobs.

Whereas the European Union isn't any stranger to protracted horse-trading, the dialogue exposes rifts in the bloc and additional strains its unity, already broken by the euro zone disaster and the 2015-16 migration disaster, which partly contributed to Brexit. "Cease this clownesque present".

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