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E-summit does little to bridge divisions between the eurozone’s north and south

The perils of the teleconference format meant EU diplomats were determined to avoid the need for leaders to redraft their joint communiqué during Thursday’s e-summit. But they ended up doing exactly that. 

EU27 prime ministers and presidents dialled in for over five hours on Thursday evening for a virtual summit which — in somewhat typical EU style — descended into a prolonged struggle over how to formulate one paragraph of their statement. In this case, the disagreement was about how far to pool resources to repair the economic destruction caused by Covid-19.

The result was some barely-healed divisions between north and south and a seven-page statement which kicked the can back to finance ministers: they have been given two weeks to put forward ideas for a “pandemic crisis support” tool.

But as the FT reports, it is not clear what mandate the finance ministers really have to move ahead. The statement does not specifically mention the main existing plan on the table, which is a credit line instrument from the European Stability Mechanism, the euro area’s bailout fund. 

And governments are fundamentally divided over more ambitious proposals to issue joint “coronabonds” to raise funds. 

Mark Rutte, Dutch prime minister and chief resister to demands for common bonds, described the final outcome as a “lowest common denominator” compromise. “The text is a bit shallow but it is the best we could achieve,” he said.

Not everyone will be so relieved at the fudge. Leaders from Spain and Italy pushed for a shorter timeline for results (10 days) and demanded the EU’s “five presidents” rather than finance ministers take the responsibility for sketching out a way forward. They lost on both counts.

Rome was also determined to avoid the summit statement explicitly mentioning the ESM, fearing that it would de facto eliminate other options for support. On this they succeeded. But as Angela Merkel made categorically clear after the summit, it is only the SM and its credit lines, and not coronabonds, that are on the table for future crisis-fighting. “The ESM is the preferred instrument,” said the chancellor. 

Eurogroup president Mário Centeno on Thursday said ministers would convene next week to grapple with the task at hand. But after weeks of division that pitted hawks in Berlin and The Hague against demands for action from Paris, Madrid and Rome, it is not immediately obvious where the path towards a deal lies.

Mr Rutte again insisted that any use of ESM money must come with full conditionality, but this is anathema to southern members of the currency bloc. With the ESM debate still sensitive, diplomats said ministers could still channel their energies into efforts to beef up loans to businesses from the European Investment Bank, or in pushing ahead with plans to find more cash in the current EU budget for coronavirus-related spending.

But despite all these initiatives, the fundamental question of how the extra debt burden created by coronavirus should be carried remains unresolved.

Leaders will also convene again in a fortnight. They will have plenty of patching up to do. Portugal’s António Costa on Thursday lashed out at “repulsive” and “senseless” comments from Dutch finance minister Wopke Hoekstra, who earlier this week suggested that southern economies had failed to reform. “That recurring pettiness threatens the future of the EU”, warned Mr Costa.

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BERLIN (Reuters) - The number of confirmed cases of coronavirus in Germany has risen to 42,288 and 253 people have died of the disease, statistics from the Robert Koch Institute for infectious diseases showed on Friday.

Cases rose by 5,780 compared with the previous day while the death toll climbed by 55, the tally showed.