Giegold (Greens) on EU Corona Bonds “People in crisis countries must feel Europe now”
MEP Sven Giegold calls on the EU to take joint action on economic issues in the face of the Corona crisis. He pleads for corona bonds. Not only German companies should be rescued, but also companies from other countries, because otherwise it could become expensive later.
Sven Giegold in conversation with Jasper Barenberg
Jasper Barenberg: Mr Giegold, is a new, threatening debt crisis looming in Europe?
Sven Giegold: Yes, unfortunately one has to fear that, because we see similar lines of tension and division in the Eurozone. It is indeed the same virus that threatens all member states and at the same time it is no one’s fault, but we see the same lines of division. And unfortunately, the German Government has decided not to side with Luxembourg, Ireland, Spain, Italy, and France, but to prevent an agreement together with the Netherlands, Finland and Austria in the Eurogroup. But we now need decisive joint action against this crisis – also in the form of financial policy.
Barenberg: In your eyes, that means a very clear yes to something like common debt, to something like corona bonds?
Giegold: You see, we owe it to the European Central Bank again that we are not already in much deeper trouble. With its decisive intervention it has prevented the interest rate premiums of Italy and others from going through the roof. And this time we must not again leave it to monetary policy alone. We need a common fiscal policy, and it is important here that we show solidarity on the one hand, but at the same time decide on a common economic and financial policy in the eurozone, so that the risks involved can be controlled. If we simply say ‘no’, we are pushing the European Central Bank to deal with all this outside the democratic realm.
“It’s enough for the moment, but it doesn’t solve the problems”
Barenberg: I would like to stay with the European Central Bank for a moment. The ECB is bringing the gigantic sum of 750 billion euros onto the market in order to use the money to buy bonds from governments and companies. The consequence – as you have indicated – is that interest rates will for the moment not rise for countries such as Italy, where the situation is particularly sensitive. Isn’t that enough for now, when the success is that Italy can continue to refinance itself?
Giegold: Yes, you said it correctly. It’s enough for the moment, but it doesn’t solve the problems, and that’s why this time rather conservative economists like Clemens Fuest from the ifo Institute, a whole group of top German economists and international economists say that this time we need something like corona bonds and a common financing instrument. We can discuss the form this instrument should take. Of course we also need to talk. But to say no as a matter of principle and to say, let us wait until the next sovereign debt crisis comes, that is wrong.
It was not only this instrument that was blocked at this Eurogroup meeting, but also the European Investment Bank’s proposal to put together a large package so that not only businesses in Germany are rightfully rescued, but also in Italy. The losses and the collapse of the Italian economy, of the Spanish economy, are our losses too at the end of the day, and, in the end, it will be more expensive for all of us if the governments act too late and too cautiously and leave Italy alone, for example.
“The economy is collapsing anyway”
Barenberg: The EU member states have temporarily suspended the upper limit for public debt. They have also relaxed the rules on state aid and mobilised billions from the EU budget. 38 billion is, I believe, the number of these. These, too, are steps that have already been taken. Why is that not enough either? Why must more be done?
Giegold: First of all, what is happening now, that the states are getting the right to get further into debt in this crisis, that is unfortunately unavoidable. The decisive element, however, is that this time of rescue – and this is a completely different crisis, which was not caused by individual states but by this virus – that this time, if we take a joint risk by saving the euro zone, we will ensure that we also have joint control over the economic and financial policy which must be geared towards the stability of the euro. Certain things in this respect did not happen last time. For example, we still have tax havens in the European Union. We did not get fair taxation of financial markets. This time we must ensure that a common policy is actually pursued, together with joint liability, and then all this will be justifiable.
Barenberg: You said that we could still talk about how it should be designed. Italy is calling for corona bonds of this kind, for joint bonds of this kind to be granted unconditionally, unlike with all other programmes, for example the European stability mechanism. You would be cautious about that and say that certain rules that ensure liability, this principle, should in any case be respected?
Giegold: Up to now, it has always been the case that money to states has been linked to draconian austerity programs. We have seen this in Greece, but also in other programmes. Of course we must not do that this time. That would be completely absurd. The economy is collapsing anyway. That is why there must be no austerity requirements this time. But of course we need a common economic and financial policy for the future, so that the eurozone can emerge from this crisis as strong as possible. This means above all investing in the future in terms of climate protection and digitalisation, and conversely, solid public finances for the future. But all this will only work if all countries have reliable access to cheap refinancing. Italy will not emerge from the crisis with the high interest rates that may be demanded on capital markets eventually.
“It depends on Italy in the first place”
Barenberg: And Italy is the most difficult problem at the moment from your perspective as well? Italy will be the deciding factor?
Giegold: I think it depends on Italy in the first place. But you see: The pictures from Spain are also terrible, and I think there are also other questions. The whole thing is not only an economic problem, but also the question of whether people in the countries where the crisis is hitting hardest, where human suffering is greatest, can feel Europe. That is why it was so important that patients have now been taken to Germany from French neighboring regions, for example, but also Italians transferred to Saxony, but we can do more. The people in the crisis countries must feel Europe now. The Bundeswehr, for example, has the Strategic Medical Evacuation Unit, an Airbus and other means of transport for intensive care patients. I believe that Germany should make an offer, together with other member states – we still have free capacities – to fly out patients who need intensive care. These are symbols of European solidarity, which ultimately pay off for a stronger Europe.
“We still need to invest in the future.”
Barenberg: Finally, Mr. Giegold, this aspect. If it is true that there will inevitably be high piles of debt that will continue to burden the budgets of the member states for years, for many years to come, does that mean that Europe, the EU, must give up certain tasks? What would these be?
Giegold: First of all, I believe that, as we can see in Japan and in other countries, one can also live with a high level of debt if interest rates are permanently low. We have to talk about that. It will not work that the weakest states pay the highest interest rates. With this we cannot invest in the future. I believe, however, that it would be a mistake to say that because we have high debts we are not financing investments in the future, because only investments in the future will ensure that we are competitive in the face of global digital giants and the Chinese challenge. That is why we still need investment in the future, and it is cheaper and better to invest on a European level.
Barenberg: To finish one other short question. Will the heads of state and government be able to get it together today?
Giegold: I hope so. I hope that Mrs Merkel will act differently today than we have seen in the Eurogroup through the finance ministers. We need an agreement and a clear signal today and not again the old divisions in the face of the disease that affects everyone equally.
Link to the original article in German: