Spain, Italy and France lead the offensive in favor of "Eurobonds"

Brussels correspondent

Updated:03/26/2020 02: 37h

The leaders of nine of the countries in the euro zone, including Spain, have sent a letter to the President of the European Council, Charles Michel, to open the debate on the creation of a collective debt instrument. Even knowing that there will be no agreement in the telephone meeting that the heads of state or government are going to hold today Of the Twenty-seven, the countries that sign this letter want the discussion on the way out of the crisis to begin as soon as possible.

The letter has been promoted by the Italian Government, which is not in vain the most vulnerable country in debt matters. Although at this time in the Eurogroup on Wednesday it was again found that all EU countries have a convenient access to markets, it is assumed that the investments necessary to reactivate the economy will be so large that they could jeopardize the financial stability of several partners.

Another of the signers, BelgiumFor example, which has made an effort in recent years to reduce it, is also above 100% of GDP in terms of debt. France, which also subscribes, rubs these parameters. Greece, Ireland, Portugal, Slovenia and Luxembourg, complete the list of those who support this idea that in terms of a European diplomatic source intends to "send a message to citizens that we can do more in terms of European economic solidarity".

The letter does not mention the term "eurobonds" or "coronabonds" but insists that in this case it is a crisis "for which no country can be blamed. "We are all facing external and symmetrical shock, for which no country is responsible but its negative consequences will affect everyone. And we must all be guarantors of an effective and united European response.

The members of the European Council should have met in Brussels today and tomorrow according to the ordinary calendar, but lor they will only do it for two hours and telematically, which will not even allow to initiate a deep discussion on this question. But, as a representative of one of the most relevant countries in Europe said, "In recent days we have seen some of the old dogmas blow up, starting with the stability pact, and nothing has happened ».

GRANDCHILD

Eurobonds: a basic guide not to miss

What are Eurobonds

These are bonds shared by all the countries of the Eurozone. In other words, it is the EU that issues this debt and therefore it is the group of countries that undertakes to repay it. So individual risk is diluted for each nation.

And the coronabonos?

The coronavirus crisis has once again brought to the table the possibility of issue joint debt between European countries. This instrument has been colloquially called "coronavirus" because this common money would be used exclusively for pay the costs of coping with the pandemic and its social and economic consequences. Rules would be established to determine where the funds can be spent and when and how they should be returned.

So is it a new initiative?

No, the idea of launching a common debt bond has already run aground. It was stopped, above all, by the fear in the countries of the north to end up paying with this initiative the excesses of the south. During the euro crisis, Germany, along with other countries in central Europe, flatly refused to make a joint debt issue, even in the most difficult times when the survival of the EU was threatened. The "ant" countries did not want to take responsibility of the bill that the "cicadas" party had left.

Why is it different now?

Because in this crisis it has not come from an excess of parties, nor from deficits, but rather from a health epidemic that threatens all the territories of the Eurozone, without the borders or public accounts being able to prevent it. The economic damage that is coming is very serious, unprecedented, and its depth will depend on the measures that must be taken to control the epidemic and, above all, on its duration over time. While the mobility limitations continue, the different governments are going to have to weave a protection net to avoid the fall of citizens and companies, which will carry enormous costs and a increased budget spending still difficult to specify.

What position do the different countries hold?

After the lack of agreement of the Eurogroup on Tuesday, Sánchez along with the prime ministers of Belgium, France, Greece, Ireland, Italy, Luxembourg, Portugal and Slovenia, yesterday they sent a letter to the President of the European Council, calling for coordinated action and a common debt instrument. In aopen position for negotiation would be Germany, Austria and Ursula von der Leyen, President of the EC. The opposition is led by the Netherlands.

How can the "coronabonos" help Spain?

Common debt seeks guarantee long-term financing of the measures derived from the emergency. After the action of the ECB, the risk premiums are not triggered, but the differences between the volumes of public debt of the different countries pose a medium-term threat. Spain is among the most indebted countries of the euro and, in addition, its economy, based largely on services and tourism, and with a large percentage of SMEs, is highly exposed to the shock of the virus.

The letter also proposes as another possibility to expand the European budget, whose discussion has been frozen since last month, because "nobody can imagine that the debate on the financial perspective will resume as if nothing had happened." The letter proposes that at least in 2020 and 2021, the community budget will have strong instruments to contribute to the revival of the economy.

The heads of state or government will also speak of the need to coordinate the end of the restriction measures, to prevent a disorderly uprising from having negative effects on the neighbors. And, in any case, European leaders "want to find a way to explain to citizens "That they are collaborating with each other more intensely than they think, even if it is doing things that many societies find it difficult to understand right now, because everyone is afraid and many leaders believe that they would be criticized for it ».

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