PM Costa threatens EU: ‘either you do what you’re supposed to, or it’s over’

Portugal’s prime minister António Costa launched a blistering attack on Dutch finance minister Wopke Hoekstra last week which rapidly morphed into a full-blown challenge to the EU’s very survival.

Indications that the bloc was in trouble have been ‘in the air’ for weeks, but this was the first real showdown in ‘primetime’.

A clearly furious prime minister addressed journalists minutes after a disastrous EU summit that took place over six difficult hours via video conference saying the Dutch position was “repugnant”, “completely undermining the spirit of the EU”, showing the “recurrent meanness” for which northern member states have become (in)famous as well as lacking in all conscience.

“If we don’t respect one another, don’t understand one another, lack the capacity to respond in unison to a common challenge, then no one understands anything about the European Union”, he thundered.

So what had Mr Hoekstra actually said, and why was Mr Costa so angry? 

The Dutch finance minister said he felt the EU “should investigate countries like Spain that say they have no budgetary margin to deal with the effects of the crisis provoked by the new coronavirus in spite of the fact that the eurozone has grown for seven consecutive years”.

It’s the context that was key. 

Summit discussions centred on  ‘coronabonds’ (which are essentially ‘eurobonds’, dressed up to fit the times) – a form of ‘mutualised debt’ designed to be taken on by all members of the EU. 

They are instruments countries like Mr Hoeskstra’s have said they will never countenance, although ‘experts’ like Portugal’s own governor of the Bank of Portugal Carlos Costa say they are exactly what the bloc needs if it is to survive.

Thus Thursday’s agonising summit was essentially a form of inelegant clog-dance around the subject of coronabonds, ending in all countries concerned ‘agreeing’ – after endless bickering over the wording of their agreement – to kicking the issue two weeks down the line pending a decision by the Eurogroup.

Talking to Reuters before the summit, Carlos Costa warned that failure of member states to “cooperate in this crisis” would undoubtedly “permanently scar the European project.” 

“Solutions must be found in order to avoid the coronavirus emergency becoming a second sovereign debt crisis”, he stressed – and in his opinion coronabonds are part of those solutions. These bonds would be repayable through the EU’s long-term budget, having very long maturities of several decades in order to dilute yearly contributions by member states.

Without them, the bank governor predicts this new crisis will see weaker economies brought (back) down to their knees with crippling debt.

And thus António Costa’s sense of fury.

There has never been much rapport between the PS Socialists and Carlos Costa, but on this issue they appear in complete agreement.

President of the Republic Marcelo Rebelo de Sousa is equally solid, telling reporters the day after António Costa’s extraordinary broadsides that he supports the prime minister’s attitude wholeheartedly.

In a statement to the press, Marcelo stressed that the countries opposing the issue of coronabonds (Holland, Austria, Finland and Germany) are “a minority” that in his opinion are “refusing to make clear, less timid, more determined steps” in terms of solidarity. 

Reaction from Holland has so far been sparing. The government is “looking into what exactly Mr Hoekstra said”, but regarding eurobonds/ coronabonds, it hadn’t changed its attitude one iota.

This saw prime minister Costa retort with even greater sense of outrage the following day that: “Either the EU does want it’s meant to do, or it ends”.

The challenge came during a press conference in which one reporter had asked if Mr Costa ‘regretted’ his ‘tough words’ of the day before.

Where this impasse goes is what we will learn in the coming days following discussions by Eurogroup finance chiefs.

It’s not looking good. Said the BBC last week: “For ordinary people, frightened for their health, the safety of their loved ones, worrying about their rent and feeding their family after businesses shut down, the idea that Europe’s leaders spent six hours on Thursday night, squabbling over the wording of their summit conclusions in order to defer a key decision over coronavirus funds, will be incomprehensible”.

Worse is that leading figures like Angela Merkel seem unswayable. The German chancellor told Reuters last week that despite “letters from some member states who have imagined or are imagining corona bonds, we have said from both the German and other sides that this is not the view of all EU countries.”

Merkel prefers an alternative plan to use the European Stability Mechanism (ESM), which harks back to 2012 and all the hardship that year and the ones immediately after it meant for countries like Greece, Spain, Italy and Portugal.

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