ESM CEO Klaus Regling estimates that a third, or 80 of the 240 billion euros in available corona support from the European emergency fund, will be used by euro countries. “That means that the ESM will still have 330 billion euros in borrowing capacity” if another crisis arose, the German said. It also means that the euro countries, which are shareholders of the ESM, do not have to increase capital despite the corona crisis.
Eurozone (Eurogroup) finance ministers agreed last Friday on the details of the so-called Pandemic Crisis Aid through the ESM. Despite initial contradictions by The Hague about the use of the ESM without conditions, the agreement has been concluded “in record time”, says Regling in a conversation with five European news agencies, including the ANP. “The crisis hit three months ago, we went two months ago to see what the ESM can do.”
Usual conditions for Member States calling on ESM loans, such as austerity, economic reform or control missions, have been removed. However, Minister Wopke Hoekstra has gotten his sense that the money may only be used to finance direct and indirect costs in health care, treatments and preventive measures due to the corona virus. The loans also have a short maximum term of ten years and applications are limited to the end of 2022.
“There was a difference of opinion, which is quite normal in Europe. And sometimes the rhetoric gets a little out of hand. The Dutch government has said that communication was not ideal, “said Regling. He refers to the accusations from the southern member states that the Netherlands would not show solidarity. The Hague, for example, points out that it is taking on joint debts, such as Italy, Spain and France. “But differences of opinion are part of life. What matters is that we have unanimously reached an agreement that everyone can live with.”
The credit lines are available for all 19 euro countries, but Hoekstra has already said that the Netherlands will not use the ESM loans that are cheap, reliable and safe, according to Regling. He says that he will not advise certain countries that can use this extra aid to submit an application. “Every government has to decide for itself.”
The € 240 billion is part of a larger package agreed by the Eurogroup, totaling € 540 billion, with support for companies and Member States temporarily subsidizing company salaries. Now we have to wait for proposals from the European Commission for a recovery fund, coupled with a new multi-annual budget (MFF) from 2021 to 2027.
,, The recovery from the corona crisis will hopefully start in 2021, but will certainly take two or three years. The recovery fund will have to be sizeable, “says Regling.” It is important that the European response to the crisis is designed and implemented in such a way that countries most affected receive more assistance. The euro crisis was caused by incorrect policies. no one can be blamed. “