German economist: EU must step into help cash-strapped member states

Berlin, Apr 2 (efe-epa).- The head of the influential German Institute for Economic Research (DIW) on Thursday called for greater financial protection and solidarity for European nations that are more economically vulnerable to the effects of the coronavirus pandemic.

Marcel Fatzscher said rapid action was key to helping countries such as Spain and Italy by making funds available through the European Stability Mechanism (ESM) or through so-called “corona bonds”, a proposed common debt instrument designed to allow financially-strapped nations tackle the pandemic more cheaply.

Spain, Italy and France have called for the issuance of the bonds but German Chancellor Angela Merkel, and the head of the European Commission Ursula von der Leyen, as well as Dutch Prime Minister Mark Rutte, have resisted the idea.

“The corona bonds have the advantage that they would not increase, for example, Italian or Spanish debt. But for me the decisive factor is speed and probably the fastest thing would be to do it through the ESM,” he told a zoom video press conference.

The economist said the current health crisis could not be thought of in terms of national economies but rather on a European level, adding that more than half of Germany’s exports ended up in fellow EU member states.

“If Italy has problems, Germany has problems,” he said.

Fratzscher said that other options should also be examined, and said the response was being bogged down by those countries dogmatically in pursuit of corona bonds and constant criticism of German government for not supporting them.

“I’m convinced that Germany’s attitude toward this crisis is better than the one it had in 2008 or 2009 (the time of the financial crisis),” he said.

Fratzcher’s name appears on the list of academics calling on the EU to set up a special fund to face the coronavirus outbreak.

He said it was too soon to tell the impact the coronavirus would have on the German economy, adding, however, that if it could regain its economic footing in May then a rapid recovery could be possible.

That may be too optimistic, as a recent rise in new Covid-19 infections in Germany looks set to test the country’s health system, although the figures in each of the 16 federal states (Länder) varies significantly.

The Robert Koch Institute on Thursday registered 6,156 new cases, bringing the total number to 73,522 while the overall number of deaths jumped by 140 to 872. John Hopkins University, which uses different criteria, said there were 77,981 infections and 931 deaths.

A light slowdown in new cases was not enough to affect the nationwide restrictions Merkel put in place on 22 March and recently extended until 19 April.

But these measures differ from state to state. In Bavaria, which has 18,500 infections in a population of 13 million, authorities ordered a tougher lockdown than in North Rhine-Westphalia, which has 15,500 cases in a population of 18 million.

Germany is fifth in the world in terms of positive cases, according to John Hopkins, behind the United States (216,405), Italy (110,574), Spain (110,238) and China (81,589). EFE-EPA


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