The fact that finance ministers from the 19 eurozone countries were forced to break off negotiations after 16 hours of talks is rather unsettling. The impasse means that the pressing issues of how to deal with the impact of the coronavirus pandemic and how to share the burden of rebuilding economies afterward remain unresolved.
Nine of the eurozone countries want to take on debt to solve the problems, whereas four — including Germany — oppose that approach. But this isn't a fight in which parties are posturing on principle: It is about pure economic survival. Unlike the comparatively harmless situation brought on by Greece's debts in previous years, the current discussions go far beyond whether flinty rich countries are willing to extend credit to their poorer allies.
Right now, no one can say whether there will even be wealthy countries to help poorer ones when the coronavirus pandemic is over. The largest recession in the past 90 years looks set to ravage France, Italy, Spain and Greece; Germany, the US and the UK will also take potentially devastating hits. The pandemic will ultimately hobble the entire global economy.
Read more: EU pledges €100 billion to workers facing cuts during pandemic
German Finance Minister Olaf Scholz, who recently said he would approve about €50 billion ($54 billion) in loan guarantees to domestic businesses, is hesitant to make similar promises to eurozone partners. That is exactly what the introduction of eurobonds, coronabonds or shared debt would be.
Read more: Merkel calls outbreak Germany's biggest challenge since WWII
Italian Prime Minister Giuseppe Conte is insisting on collectivizing debt. He knows full well that he cannot count on financial markets to generate the €400 billion he recently promised his country. There are rumors that Italian officials have threatened to leave the Eurozone — perhaps even the EU — if the country does not receive the credit that the government it is demanding.
Thus, it would seem that everything is at stake this time: the economic survival of individual member states, as wells as the future of the European Union itself. It's no wonder that German Chancellor Angela Merkel has called the pandemic the biggest test that the European Union has faced since it came into existence.
Read more: Swiss look to easing coronavirus lockdown
One more round
Finance ministers are scheduled to resume talks on Thursday. And, next week, the heads of state and government — who recently broke off their own negotiations — are set to tackle this massive challenge. At that point they will have to make a decision, for every day they continue to dither costs eurozone countries billions. Yet, so far, EU countries have been unable to find consensus on a path forward.
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European Commission President Ursula von der Leyen was set to present a road map for the normalization of life in the EU on Wednesday — until she was forced to reconsider after receiving a number of calls from furious heads of state and government. Now, rather than finding a path forward together, each EU member state is acting alone to protect its citizens.
At this rate it will be months before life and business return to normal in the European Union. But do we have that much time? And will the EU survive?
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