The Duran’s Alex Christoforou and Editor-in-Chief Alexander Mercouris discuss German Chancellor Angela Merkel’s resurgence within the EU to once again dictate the financial policy amidst the Covid-19 economic lockdown and meltdown.
Merkel getting her way with an ESM rescue scheme may end up driving Italy out of the Eurozone, as the south European country is on the verge of a collapse, not capable of taking in more loans with austerity strings attached.
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Debt jointly issued by euro zone members is not the right way to counter the economic impact of the coronavirus, a leading candidate to succeed German Chancellor Angela Merkel said.
Although he ruled out members borrowing jointly, Friedrich Merz, a lawyer and former leader of the parliamentary faction of Merkel’s CDU, suggested Germany should show more solidarity with EU peers and supported more spending by the bloc.
Germany needed to “develop much more sympathy for the situation of our European neighbours,” said Merz, speaking to foreign reporters by video link after himself recovering from the coronavirus.
Italian Prime Minister Giuseppe Conte has called for the EU to issue common euro zone bonds to demonstrate the bloc’s solidarity in tackling the coronavirus crisis. Germany, backed by the Netherlands, has resisted such plans.
Nevertheless, Merkel has hinted this week at a possible compromise, which could see the EU’s executive commission borrow on its own account against its future budget, without the bloc’s members issuing joint debt.
Merz’s remarks appeared consistent with that approach.
“Within the framework of the European budget, we can talk about everything, but I am and remain of the firm opinion that Eurobonds or Coronabonds, or however one should call such bonds from the European Union, are not the right way,” Merz said.
“I believe the EU should be much better funded…but then it has to be done with an instrument where revenue responsibility and expenditure responsibility are in one hand,” Merz said.
Merz said that joint debt issuance would require European treaty change, which he opposed. But he argued that he was nonetheless the most European of the candidates for running for the chair of Merkel’s Christian Democrats (CDU).
The new leader, set to be chosen at a party meeting in December, will be in pole position to run as chancellor in the next federal election due by October next year, as Merkel has said she will not seek a fifth term.
Polls show pro-business Merz, 64, is ahead of his main rival, Armin Laschet, a centrist seen as offering more continuity with Merkel.
EU leaders are to discuss the heated topic of jointly issued debt at a videoconference on Thursday.
The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of The Duran.