The coronavirus pandemic has exposed deep divides in Europe, with EU member states arguing over how to tackle the economic fallout.
Italy and Spain have accused northern nations – led by Germany and the Netherlands – of not doing enough. Spanish Prime Minister Pedro Sánchez has even warned that if the EU fails to come up with an ambitious plan to help member states saddled with debt by the fight against coronavirus, the bloc could “fall apart”.
EU Council and Commission chiefs released a statement on Monday that said a “strong package is in the making”. Eurozone finance ministers will hold a teleconference later on Tuesday.
But a similar meeting two weeks ago bore little fruit. As a result, leaders sent their finance ministers back to the drawing board.
Italy, Spain, France and other EU states want to share out coronavirus-incurred debt in the form of “coronabonds” (or eurobonds) – mutualised debt that all EU nations help pay off.
Some from these hard-hit nations have been angered by a perceived indifference from other EU states.
Wealthier countries like Germany are not yet digging deeper into their pockets to help out poorer nations like Italy and Spain.
Germany wants to set up an EU rescue fund and lend using mechanisms set up during the financial crisis of a decade ago.
This week, a group of Italian mayors and other politicians bought a page in Germany’s Frankfurter Allgemeine Zeitung newspaper to remind Germany that it was never made to pay back its debts after World War Two.
Public opinion has also been shifting in Germany.
Economists, politicians and commentators who once railed against mutualising eurozone debt to bail out Greece amid the last financial crisis are calling for exactly that to help Southern Europe deal with the coronavirus.
Even the German tabloid Bild, that led the anti-Greece charge 10 years ago, is now calling for so-called coronabonds. The situation today is more like a natural disaster then a crisis sparked by risky lending, they argue.
Finance ministers are likely to converge on three ways to prop up the economy – use of the European Stability Mechanism (ESM) bailout fund, the European Investment Fund and the European Commission’s short-time work scheme.
“There is an agreement emerging on the first three options, but that is not enough,” French Finance Minister Bruno Le Maire told journalists ahead of Tuesday’s meeting.
Mr Le Maire wants a fund worth “several hundred billion euros” in joint borrowing to finance economic recovery.
But Austria, Denmark, Finland and the Netherlands have refused to back joint borrowing, anxious that they could be liable for repaying the debts of member states in the south.
The EU will likely agree on economic support through the usual channels, not through new coronabonds.
“There is a lot of room for solidarity within the existing instruments and institutions,” read a statement from EU Council and Commission chiefs on Monday.