The call for help from the capitals of the European Union came quickly. No sooner had the governments shut down public life in their countries in the first wave of coronavirus than the desire for additional funds from Brussels arose. Part of the whole truth, however, is that six months ago we first spoke of Eurobonds. The construction fund was devised to prevent the careless introduction of joint liability. The fact that nobody is really interested in the fund’s loan component and that the Member States are also avoiding the loans from the rescue package 1 speaks volumes.
It shows that, despite the disaster, other ideas were also at work. Many people wanted to renovate themselves with fresh money. No wonder, then, that both the finance ministers of the donor countries and the members of the European Parliament quickly drew red lines. Corona aid is limited in time and may only be used to eliminate the consequences of the pandemic.
This has prevented the aid money from being used to finance other projects in some Member States. After all, especially in over-indebted countries, any attempt to reduce the extreme national debt without unpopular reforms is welcome. It is therefore important that the EU Commission, like the financial politicians, ensure that the Union returns to its solid budget policy after the pandemic.
It was right to override the debt rules at an early stage. But that shouldn’t be a permanent condition. And the illusions about a haircut, as some Italian politicians are now putting forward, are poison for the post-Corona era. Anyone who demands and enables financial injections and economic stimulus programs in the event of a crisis also needs exit strategies at the same time, how to get down from high debt levels.
In fact, some states are now paying the bill for not doing well in better times. Countries like Germany, which had already reached the “black zero”, are finding it easier to get out of the financial policy bazooka now. It therefore remains correct that Brussels has launched aid programs worth billions. But even more important was that they were subject to strict conditions. And nobody should shake that.
© Mannheimer Morgen, Tuesday, November 24th, 2020
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