EU power Germany, as well as France, have lifted their feet to end opposition from the Netherlands over the granting of economic conditions to an emergency credit for governments resisting the effects of the pandemic, and after assurances for Italy that the bloc would show solidarity.
But the agreement does not mention the joint issuance of debt to finance the recovery – something that Italy, France and Spain strongly encouraged but which is a red line for Germany, the Netherlands, Finland and Austria.
It only reports to the 27 national leaders of the bloc if “innovative financial instruments” are to be used.
French Finance Minister Bruno Le Maire said Europe has approved the most important economic plan in its history.
Earlier Thursday, Italian Prime Minister Giuseppe Conte warned that the very existence of the EU would be threatened if it could not unite to fight the pandemic.
For weeks, EU member states have struggled to present a united front in the face of the pandemic, bickering over money, medical equipment and drugs, border and trade restrictions, amidst tense talks exposing bitter divisions.
Earlier today, German Chancellor Angela Merkel spoke with Conte and Dutch Prime Minister Mark Rutte on the phone, paving the way for the agreement, which will now be taken up by leaders during a joint video conference in the next days.
She said that she and Conte agreed on “the urgent need for solidarity in Europe, which is going through one of its most difficult hours, if not the most difficult”.
“Germany is ready for and committed to this solidarity,” she said.
Merkel said Berlin would not accept jointly issued debt, but said other financial avenues were available.
Officials said Merkel had also asked Rutte to stop blocking the deal, which is intended to provide a safety net for governments, businesses and the public against the deep recession the pandemic is expected to cause this year.
“The feeling in Germany is that everyone has done enough postures for their national audience. It’s time to get together, “said a senior EU official in Brussels.
So far, discussions have been tense between the north, which is more fiscal conservative, and the indebted south, which has been the hardest hit by the pandemic.
The package would bring the EU’s total budget response to the epidemic to 3.2 trillion euros (US $ 3.5 trillion), the largest in the world.
It includes access to cheap credit from the euro area rescue fund, the European Stability Mechanism (ESM), more guarantees for the European Investment Bank to step up lending to businesses, and a subsidy scheme wages so that companies can cut working hours, not jobs.