In Italy, nationalist politicians for years have bashed the European Union, but this time it’s been the pro-E.U. establishment in Rome that wondered whether the bloc was failing one of its most critical tests.
“There is no doubt that if our response isn’t strong and unified, if Europe fails to come up with a monetary and financial policy adequate for the biggest challenge since World War II, for sure not only Italians but European citizens will be deeply disappointed,” Conte said in an interview with the BBC.
The frustration in Italy started building after E.U. countries last month were slow to come to Italy’s aid with medical supplies. The E.U. belatedly stepped up its efforts, but resentment crested as leaders bickered over how to support the bloc’s stricken economies. A Thursday meeting of E.U. finance ministers ended with a $590 billion compromise after days of bitterness, but it was clear that tough discussions would continue over future rounds of rescue efforts.
Italy, as well as Spain, France and several other nations, had asked that newly issued debt be shared across the bloc. An alternative involved extending loans with tough conditions to the most economically vulnerable countries, similar to the aid to Greece during the financial crisis. The Netherlands was Italy’s main opponent, backed by Germany, Finland and other wealthy nations.
The deal — which still needs to be signed off by national leaders — would use the euro zone’s bailout fund to offer up to $262 billion in credit lines to struggling countries. In a nod to Italy’s concerns, the demands placed on countries that sought the money would be minimal. An additional $109 billion would go toward support for employment programs that aim to avoid layoffs. Other programs would support struggling businesses and help fund medical relief efforts. And the agreement left open the possibility that euro zone countries eventually share borrowing costs.
“European bonds were put on the table, conditionalities on the [bailout fund] were kept off the table,” tweeted Italian Finance Minister Roberto Gualtieri after the meeting, signaling Italian support.
Even before the economic talks became testy, the bloc was already under fire for its slow moves to address the health crisis triggered by the pandemic — although on that front, it had a somewhat legitimate rationale, because, until now, countries have fiercely guarded public health issues from oversight in Brussels.
On economic issues, there is no way to escape blame: They are at the core of the E.U. But senior E.U. officials have battled one another even as unemployment has skyrocketed from Lisbon to Helsinki.
Leaders suggested, optimistically, that what would be remembered is the compromise, not the fighting.
“We can all remember the response to the financial crisis of the last decade, when Europe did too little too late. This time around is different,” said Portuguese Finance Minister Mário Centeno, who led the discussions.
Analysts said that a deal was desperately needed for the sake of the E.U.’s future.
“There is the question of what do we need Europe for, there’s this relevance question. This is not about charity,” said Janis Emmanouilidis, director of studies at the European Policy Center, a Brussels-based think tank.
Economists aren’t sure how much spending may be needed to jump-start economies across Europe, although they expect it will ultimately be in the trillions. Senior E.U. officials have floated ideas to boost the common E.U. budget by $1.6 trillion in the coming years to help fight the crisis. And each of the 27 E.U. countries probably will have to borrow deeply to help support devastated citizens and businesses.
The main issue is how to pay to reboot Europe’s economy once the pandemic eases. Economists forecast that the collective economy of the 19 countries that share the euro currency will contract by more than 10 percent this year — far worse than at the height of the global financial crisis or the euro crisis that followed.
During the euro crisis, Italy, Spain and Greece all faced deep financial difficulties, and long felt anger that northern European countries were unwilling to allow them to pool their credit and borrow money collectively.
This time, Italy and Spain had the misfortune for now to be hit the worst by the coronavirus pandemic, meaning that through cruel coincidence, the countries with some of the most painful scars from the euro crisis also have the deepest economic needs now. It has not taken long for old anger to burst forth.
In Italy, a poll published by La Repubblica newspaper indicated that 70 percent of Italians say they had little or no trust in the E.U. Across the country, mayors have pulled down E.U. flags from city hall buildings.
“We believe in Europe but expect it to support our Italy and other nations suffering because of an epochal health-care emergency, and a perhaps more devastating economic crisis,” said Piergiorgio Ferretti, the mayor of Atri, in the Abruzzo region, who removed the E.U. flag for 24 hours in what he called a symbolic “scream for help.”
Quentin Ariès in Brussels contributed to this report.