Germany and France have suggested a common debt instrument to help the European Union recover from the economic fallout of the COVID-19 pandemic. It's a risky move — but one that was necessary, says Bernd Riegert.
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Image: Reuters/K. Nietfeld
France and Germany are once again pushing ahead with a common European agenda — finally. French President Emmanuel Macron and German Chancellor Angela Merkel have overcome their differences with regard to getting the EU economy back on track after the coronavirus pandemic. Merkel has changed tack, in principle agreeing to the idea of collective debt — despite the ban on debt-sharing in the treaties that created the eurozone.
Macron has tabled a proposal that could see €500 billion (about $546 billion) distributed mainly to heavily indebted southern EU member states in grants rather than loans, as originally envisioned by Germany and other wealthy EU states. Macron, incidentally, had initially called for three times this amount of money to be distributed.
EU needs to show solidarity
So far, Macron's idea remains a proposal. One, however, that already has the support of the European Commission, and thus puts eastern and northern EU states under pressure to acquiesce. The arrangement, after all, would see them receiving less money and subsidizing countries like Italy, Spain and France, who have been hard hit by COVID-19.
EU member states like Poland, Hungary, Bulgaria and Romania — who have been net recipients of EU funds — will now be expected to show solidarity with member states reeling from the effects of the pandemic.
Before any of this can become a reality, however, Merkel will first need to get her very own Christian Democratic party on board, as well as its Bavarian sister party, the Christian Social Union. This will prove challenging, as both have opposed the idea of increased spending.
Macron and Merkel have suggested that the European Commission could finance the recovery fund by taking on collective EU debt. Over the next 20 years, member states would then collectively repay what is owed according to their overall contribution to the EU budget. This looming debt would, however, limit European governments and parliaments in their ability to spend at home until 2040.
Macron and Merkel are effectively proposing the bloc issue eurobonds, or coronabonds — government bonds with limited liability. This, however, may violate Article 311 of the Treaty on the Functioning of the European Union, which stipulates that the EU budget be funded solely from states' own resources. It will now be on EU legal experts to find loopholes around this provision.
On course for coronabonds
Macron and Merkel have taken the necessary decisive action amid an unprecedented crisis. Together, they are pushing for a shared European solution. But it remains to be seen if all member states are willing to tag along.
Next week, the European Commission will present its comprehensive budget plan, of which the recovery funds is but one element. EU members will have to come to an agreement soon if the money is to be handed out this year to kick-start the bloc's economy. But it does look like this one-off compromise could become a reality.
Coronavirus: Europe slowly begins to wake up
Slowly but surely signs of life are visible on high streets, in schools and workplaces across Europe as countries begin to lift their COVID-19 lockdown measures. DW takes a look at which restrictions have been lifted.
Image: picture-alliance/AP Photo/P. Karadjias
Welcome back!
Shops across Europe were forced to close their doors to prevent the spread of COVID-19, including this fashion store on Makarios Avenue in downtown Nicosia, Cyprus. A stay-at-home order had been in place on the island since late March. On May 4 President Nicos Anastasiades allowed construction sites and small retail stores to open again. People should be able to move freely again on May 21.
Image: picture-alliance/AP Photo/P. Karadjias
Beach days are back
People in Portugal are now able to enjoy strolling along the beach again. Under the country's state of emergency, which was introduced on March 18, beaches were shut, along with non-essential businesses and restaurants. People were still able to go outdoors and exercise, but now have more freedom to go to shops and hairdressers. However, face masks are still required in closed spaces.
Image: picture-alliance/Zuma/SOPA Images/Diogo Baptista
Time for a trim
Hairdressers were also allowed to reopen in Greece on May 4, including this salon in Athens. Other businesses to open up after a six-week lockdown include florists, bookstores and other small stores. Restaurants and bars will have to wait until the end of the month. Greeks can also leave their homes without needing a form stating their reason, but face masks are mandatory in public transport.
Image: picture-alliance/AP Photo/T. Stavrakis
Face mask to ride
Rules requiring face masks on public transport are now commonplace throughout Europe. In Hungary's capital Budapest, transport workers were offering travelers masks at Nyugati Square. Budapest remains under stricter restrictions than the rest of the country. Other cities can begin to open up some stores, museums and public spaces.
Image: picture-alliance/AP Photo/Z. Balogh
Out and about
Public spaces in Spain had been deserted. For 48 days residents were not allowed to leave their homes except for food, medical reasons, or to walk the dog. Restrictions and social distancing rules are still strict, but people are finally able to go out for exercise. People in the capital Madrid pounced on the opportunity.
Image: Reuters/J. Medina
Back to work
Italy was also under an extremely strict lockdown, with people only allowed to go out for very limited reasons. But on May 4 it slowly began to allow some people to return to work, under social distancing conditions. Workers at a shoe factory in Castelnuovo Vomano, in Teramo province, have to work wearing face masks and separated by plastic screens. Construction workers can also return to sites.
Image: picture-alliance/dpa/D. Stinellis
Paying respects
The lifting of restrictions in Italy also allows up to 15 people to attend a funeral, albeit while wearing masks. During its lockdown, Italy banned funerals to stop the spread of COVID-19, which denied many people the chance to say goodbye to loved ones.
Image: Reuters/A. Parrinello
School's in
Austria is making sure 100,000 final-year students are able to return to school before their leavers' exams. Teachers like Richard Fischer in Vienna handed out medical face masks to students before the start of lessons. The country is also allowing people to visit relatives in care homes again. Small shops and other businesses were already allowed to reopen on April 14.
Image: picture-alliance/dpa/H. Punz
Up and running
In Germany professional footballers have been in training, despite competitions currently being suspended. Like other clubs, Bundesliga champions Bayern Munich have been putting their players through their paces, albeit only in small groups. The Bundesliga is targeting May 15 to restart, the first major European league to do so. Fans won't be allowed into stadiums, however.
