EU finance ministers split on coronavirus rescue plan

EU finance ministers on Tuesday will discuss special crisis measures to help European countries withstand the economic shock of the coronavirus outbreak, but powerful Germany is cautioning against unreasonable expectations.
The COVID-19 outbreak has brought the European economy to it knees and Italy, with the backing of France and Spain, wants a massive response from EU partners in a historic act of financial solidarity.
But northern countries, led by Berlin and the Hague, believe a huge stimulus by the European Central Bank, backed by national spending, is adequate for now.
At the heart of the split are deep doubts of northern and wealthier European nations about the financial discipline of southerners, especially since the dark days of the eurozone debt crisis.
Countries like France, Spain and Italy have long called for a eurobond, joint borrowing by the 19 members of the euro single currency that could serve as the bedrock of a more stable and unified European economy.
Italy backed by France recently renewed the call by asking for EU-wide "corona bonds", but ahead of Tuesday's talks, Germany angrily dismissed the return of the "eurobond" concept.
"I can only recommend that we don't hold a mock debate for ideological reasons, in which everyone digs out their preferred solution from five or ten years ago," said German economy minister Peter Altmaier in Berlin.
"It's not about a fundamental change of strategy for ideological reasons, that would be wrong at this time and we won't go along with it," he added.
Instead, the ministers are likely to agree in principle on accessing the eurozone's massive bailout war chest to help countries in need, especially Italy.
The European Stability Mechanism (ESM), governed by the eurozone finance ministers, has over 400 billion euros in firepower. Based in Luxembourg, it was created in the depths of the debt crisis and has the primary function of rescuing countries who are shut out of the markets, which is not the case now.
But the ESM can also offer loan guarantees for countries that ask for it, though Italy is reluctant to do so, afraid of signalling to the markets it has money problems.
ESM programmes also come with demands to enact painful reforms, which Italy is reluctant to accept when what it actually wants is an act of friendship in a desperate moment. If the ministers agree to make the ESM available, they will propose it to EU leaders who would take up the matter at a videoconference on Thursday.