EU MIGHT COLLAPSE UNLESS IT EMBRACES SOLIDARITY

Current Affairs 2020

Russia, China helped. EU Didn’t.!!!
• Russia even sent soldiers from the radiation, chemical and biological defense department of its army.
• Russian vehicles drove from Rome to Italy’s hardest-hit Lombardy region.

Corona Bonds (Italy’s idea, Germany Opposed)
• In March, with the virus already ripping through southern Europe, nine euro members led by France, Italy and Spain signed a joint letter pushing for so-called coronabonds — to assist buy the recovery effort.

Corona Bonds (Italy’s idea, Germany Opposed)
• However, the thought of jointly issuing debt is sharply opposed by Germany, Austria and therefore the Netherlands, who fear it weaken fiscal discipline within the future, and argue that member-states in need of assistance should use the ecu Stability Mechanism (ESM) instead.

Italian PM

• The pandemic and therefore the resulting economic and social consequences pose “a big challenge to the existence of Europe”.
• "If our response isn't strong and unified, if Europe fails to return up with a monetary and financial policy adequate for the most important challenge since the Second war, needless to say not only Italians but European citizens are going to be deeply disappointed."

• When ministerial talks collapsed on April 9 over the plan for a “corona bond”, the reaction seemed terminal.
• Germans and Dutch insulted Italians and Spaniards.
• Italy’s prime minister, Giuseppe Conte, said his country faced an “economic and social emergency”, and therefore the EU appeared to not care.

• European financial institution had said that to fight this pandemic, €1.5tn euros are needed.
• The talks prescribed just €500bn of emergency loan finance.
• Also, their wont be any sharing of the economic burden of the pandemic across European treasuries generally.

Opinion on EU might collapse
When one EU country hits trouble, the EU itself is silent. It turns its back and hopes trouble will getaway.

• “I am very worried for Italy and for the very survival of Europe,”
• “If this goes on like this, Europe will collapse.”
Italy fears that, if it borrows all the cash it must prevent an economic depression, it risks falling into a sovereign debt crisis later.

France President On EU Might Collapse

Emmanuel Macron has warned of the collapse of the EU as a “political project” unless it supports stricken economies like Italy and helps them get over the coronavirus pandemic.

• “I believe [the EU] may be a political project. If it’s a political project, the human factor is that the priority and there are notions of solidarity that inherit play. The economy follows on from that, and let’s not forget that economics may be a moral science.”

• the French president said there was “no choice” but to line up a fund that “could issue common debt with a standard guarantee” to finance member states consistent with their needs instead of the dimensions of their economies.
• this is often a thought that Germany and therefore the Netherlands have opposed.

• France is pushing for the creation of a joint fund or EU budget allocation of about €400bn additionally to emergency assistance already offered by the ECU financial institution and other EU institutions to mitigate the economic fallout of coronavirus-related lockdowns across the bloc.

While Italy, Spain and other eurozone members are backing the initiative, Germany, Netherlands, and other northern member states strongly resist mutualizing debt, arguing that it might make their taxpayers responsible for other countries’ borrowings.

“You cannot have one market where some are sacrificed,” he added.

May cause Rise of Populism and Nationalism
It would be a historic mistake to mention again that “the sinners must pay”, Mr Macron said.
He recalled France’s “colossal, fatal error” in demanding reparations from Germany after the primary war, which triggered a populist German reaction and therefore the disaster that followed.

May cause Rise of Populism and Nationalism
“If we can’t do that today, I tell you the populists will win — today, tomorrow, the day after, in Italy, in Spain, perhaps in France et al. ,” he said.

Collapse of the Currency: Euro
If Italy does leave the Euro, because of the third-largest economy within the group, it might bring down the currency. Spain, Italy’s closest direct competitor, would be forced to imitate after suffering a huge resultant shock.


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