By Michael Nienaber and Christian Kraemer
BERLIN (Reuters) – The coronavirus pandemic should act as call for solidarity among Europe’s leaders, German Finance Minister Olaf Scholz said, adding that he hoped the European Union would emerge from it stronger.
EU finance ministers agreed last week on half-a-trillion euros of support for their coronavirus-battered economies, but left open the question of how to finance the subsequent recovery in the bloc, which is headed for a steep recession.
“The current challenge is a call for solidarity. That applies on a global scale, but it also applies particularly for Europe,” Scholz said.
His comments came in an interview with Reuters cleared for publication on Thursday, in which he also reiterated Germany’s reluctance to commit any form of collective post-lockdown debt issuance by the bloc or its institutions.
Asked how the pandemic would change the EU, Scholz said: “I hope it will be stronger, more united and more confident.”
The outbreak has laid bare bitter divisions within the bloc, with member states squabbling over topics including money, medical equipment and drugs, border restrictions and trade curbs.
Last week’s agreement did not resolve the issue of whether to use joint debt to help finance the recovery, something Italy, France and Spain pushed strongly for but which remains a red line for Germany, the Netherlands, Finland and Austria.
The bloc’s 27 national leaders are only committed to discussing whether “innovative financial instruments” should be applied, paving the way for further debate.
Scholz said the question of how to finance an economic recovery plan needed “joint European answers”.
Asked if Germany would support a proposal that the European Commission could raise up to 100 billion euros per year through debt issuance, Scholz said more clarity was needed first.
“When we know where the recovery needs support, then we can also know how much money is needed at national and at European level. And only then it also makes sense to think precisely about the structure of programs,” he said.
European Commission President Ursula von der Leyen, an ally of German Chancellor Angela Merkel, said on Wednesday the EU should use its long-term budget to drive economic recovery. The next seven-year budget, starting in 2021, would have to be larger and “completely different” from previous ones.
Merkel has repeatedly said that Germany’s and Europe’s wellbeing are interlinked, but has rejected demands for common euro zone bonds.
(Reporting by Michael Nienaber, ; editing by John Stonestreet)
