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It is impossible to find an economy in Europe that is not affected by the coronavirus crisis. However, ministers in the Eurozone region have not reached an agreement on coronavirus efforts even after deliberating for hours on end.
All over the world, several countries are consistently scrambling to do all that they can to save their economies, as the effects of the coronavirus pandemic continues. For weeks now, several financial markets all over the world have felt the terrible effects of the outbreak. Many markets have plunged with the majority yet to show signs of respite. To soften the effects, the U.S. Federal Reserve, recently injected a few trillion dollars into its markets. However, countries within the Eurozone have not been able to decide how to weather the coronavirus storm.
Eurozone Coronavirus Meeting Fails
Finance ministers in the Eurozone have failed to reach an agreement on rescuing the region from devastating coronavirus effects. The 19 ministers had to postpone their discussions after a 16-hour video conference did not yield any results.
According to Portuguese finance minister and meeting’s chairman Mário Centeno, the ministers’ deliberations inched “close to a deal”. However, there was no unanimous decision on how to proceed.
The leaders were hoping to take advantage of the European Stability Mechanism, a fund created for countries in the region, especially if they fall into a sovereign debt crisis. The fund currently has about €410bn which can be channeled to lending efforts for some of the hardest-hit countries. Under the law, any country that receives a loan from the fund would have to agree to certain terms and conditions. Arriving at an agreement for what these conditions will be, caused the stalemate.
Italy and Spain are the hardest-hit coronavirus countries in the Eurozone. However, both countries seemed very reluctant to agree to the terms put forward by other members.
Certain countries including Ireland, France, Italy, Spain, and Luxembourg focused on debt issuance. The Netherlands disagreed with this, preferring other conditionalities.
Eurozone Needs to Resolve Stalemate
The meeting was smoother on a few other points. For example, the ministers are willing to dedicate €100bn to support jobs as the coronavirus pandemic has significantly depleted the job market. In addition to this, they also agreed that the European Investment Bank should give easy access to business loans, worth up to €200bn.
However, Berenberg bank economist Florian Hense, in an email, has warned that the long periods of disagreement before the members reach a deal – if they do reach a deal – could be significantly detrimental in the long run.
“The lengthy delays and intense jostling will tarnish whatever measures are eventually agreed…[and]…in the long run, the way in which the EU and the eurozone are perceived to react to the unprecedented emergency of the COVID-19 pandemic can shape attitudes to European integration for decades to come.”
Also, Italy’s Lega Nord party head Matteo Salvini has expressed his suspicion of these loans. Salvini believes that Italy should not be a part of it and should not solicit loans from other countries.