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Taoiseach backs financial help for worst-hit countries ahead of summit

John Downing


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Ireland is caught between two camps - "the frugal north" and "stricken south" - as EU government leaders, including the Taoiseach, today again discuss urgently needed coronavirus financial rescue plans.

The leaders failed to compromise at their last teleconference summit on March 26.

Richer member states, such as Germany, the Netherlands, Austria and the Nordic countries, rejected proposals that the EU itself shoulder debts to restart member state economies badly stalled in the coronavirus lockdown.

EU finance ministers made progress on other coronavirus support plans when they met on April 10. But the fundamental row over EU borrowing via so-called "coronabonds" has pitted the better-off northern states against the Mediterranean states in a rerun of a bitter row after the banking and economic collapse in 2008.

Ireland had been trying to forge closer links after Brexit with the Netherlands and the Nordic member states in a so-called "bad-weather countries alliance". But the Taoiseach has again signalled strong support for the Mediterranean group of countries ahead of today's teleconference summit, again putting distance between new potential allies in the north.

Leo Varadkar has again said he believes the EU has not so far done enough to respond to the coronavirus economic fallout. The Taoiseach said countries worst hit by the virus needed more help and ultimately every member state will need EU funding to help revive stalled economies and get people back to work.

The Taoiseach acknowledged the same row involving those who do not believe in the EU itself incurring debt.

"Ireland is very much among those countries that believe if there's ever a time for the European Union to stand together, ever a time to assemble our fire power, and to mutualise some debt, even if it is only for the pandemic and healthcare, then now is that time," Mr Varadkar said.

Italian Prime Minister Giuseppe Conte appeared to cling strongly to so-called "coronabonds" but his idea has little support. The other country worst hit, Spain, has changed tack by calling for the European Rescue Fund to dispense grants - not loans.

Both countries reject the proposal from wealthier states that the European Stability Mechanism, a bailout fund set up after the 2008 economic debacle, should be used. Loans from this involve strict conditions of economic spending cutbacks. French President Emmanuel Macron has backed an emerging compromise that the EU Commission borrows a hefty sum, perhaps up to €1.5trn, and repays it from the Brussels budget eventually.

The Taoiseach also referred to this idea and suggested it might offer potential.

But Brussels officials last night signalled that an early breakthrough looked unlikely.

This EU north-south divide has dogged discussions over future spending for quite some time.

At their last EU summit meeting proper, on February 20 and 21, the leaders were again divided on the size of the new budget stripped of €12bn per year of a UK net contribution after Brexit.

Irish Independent