EU’S virus rescue plan empowers Brussels
‘HAMILTONIAN’
BRUSSELS • European Union leaders on Wednesday proposed a $1.1 trillion coronavirus rescue plan that would give Brussels major new powers that would be a step toward integrating the bloc into a federal state.
The plan would allow the European Union to raise money on its own, separately from its 27 member states, and give the funds to needy nations. If approved, it would be a major deepening of the integration of the European Union, which has been under strain since the crisis of 2008 over how to rescue member states’ economies.
The EU plan would offer $773 billion in the form of grants to struggling countries. The remainder would be in the form of loans with strings attached, which would mirror more closely measures of the past. The EU would impose taxes to pay for at least some of the new spending.
“We either all go it alone,” said European Commission President Ursula von der Leyen, announcing the plans in the European Parliament, “or we walk that road together, we take that leap forward, we pave a strong path for our people and for the next generation.”
The proposal came after a change of heart in Germany, Europe’s most powerful economy and long the main opponent of opening rich nations’ bank accounts to help weaker neighbours.
Now, facing a challenge unlike any since the Second World War, German Chancellor Angela Merkel has dramatically shifted her stance, allowing the bloc to knit itself closer together.
Merkel is encouraging the European Union to abandon old constraints, borrow money in vast quantities and channel the cash toward the EU nations whose economies have been most devastated by the pandemic. Independent taxing and spending would give EU leaders in Brussels some powers akin to running a single nation, although both she and von der Leyen said that the effort would be a one-time crisis measure, an effort to calm fears from countries that are skeptical of tighter integration.
Proponents are calling it Europe’s “Hamiltonian moment,” after the 1790 agreement, engineered by Treasury Secretary Alexander Hamilton, that transformed the United States from a loose confederation of former colonies to a true federation with a central government.
Merkel’s proposal, which she unveiled jointly with French President Emmanuel Macron last week, is at the heart of the EU plan announced Wednesday.
Merkel’s ability to deliver will frame her legacy in the waning months of her long stewardship of the country. She has vowed to step down by the end of her term next year.
If Merkel is successful in gaining support for her plan, she could bind the EU together at a moment when it seemed at risk of spinning apart under the pressure of the pandemic. If she fails, euroskeptic politicians could be emboldened — both in rich nations, such as Germany, and struggling ones, such as Italy.