The 19 members of the euro zone agreed a compromise on Thursday to aid states in need of funding to address the profound economic fallout from the coronavirus pandemic.
But it dashed the hopes of Italy, Ireland, Spain and six other member states that had called for eurobonds to bring down borrowing costs and send a signal of unity as the continent confronts a health crisis that is threatens to become an economic disaster.
Under the deal, states can borrow from the European Stability Mechanism bailout fund to finance spending needed to overcome the crisis.
Funds will also be available from the European Investment Bank, and the so-called SURE fund of the European Commission, which will subsidise wages of workers so that companies can cut working hours of employees rather than sack them.
Work will continue on a further recovery fund, which will be passed on for discussion by EU leaders.
The compromise was reached after Italy and the Netherlands both backed down from polar opposite positions, after the intervention of both German Chancellor Angela Merkel and French President Emmanuel Macron to pursuade the sides to reach an accord.
The Netherlands had insisted that loans from the bailout funds should not be unconditional, and that there should be incentives for weaker economies to reform their finances. Along with Germany, Finland and Austria, it also opposed joint debt issuance in the form of eurobonds or coronabonds, viewing it as unreasonable to be asked to guarantee the debt of other countries.
From The Irish Times.