EU crisis: Massive Brussels row erupts as Italy and Spain warned of ‘strict controls’
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Mr Weber’s stark warning threatens to widen divisions within the bloc between countries in the south which have been hit hardest by COVID-19, and those in the so-called Frugal Four – Germany, the Netherlands, Austria and Finland – who want to keep a tight hold of the purse strings. Leaders last month signed off on a pre-agreed package of financial support, amounting to €540bn, through existing mechanisms, to be operational from June 1.
I am making it clear that countries like Italy or Spain must not use the billion-dollar aid from the reconstruction fund to combat the consequences of the Corona crisis in order to fill their budgetary gaps or to pay out pensions
However, Mr Weber, who was last year passed over in his effort to become President of the European Commission in favour of fellow German Ursula von der Leyen, told German newspaper Welt Am Sonntag: “I am making it clear that countries like Italy or Spain must not use the billion-dollar aid from the reconstruction fund to combat the consequences of the Corona crisis in order to fill their budgetary gaps or to pay out pensions.
“We need strict controls to ensure that the money is spent properly.
“People in Europe will only understand the grants to needy EU countries if they know that the money will also be used sensibly and in a future-oriented manner”.
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Referring to the mechanism whereby spending could be controlled, Mr Weber indicated his remarks were not solely aimed at Italy and Spain.
He explained: “The European Court of Auditors, the EU Commission and the Parliament should be able to audit directly and thus have the right to access the book entries for the use of billions of aid from the reconstruction fund in the respective countries.
“My trust in the Czech Prime Minister Babis, for example, is extremely limited in this context.”
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Splits in the bloc when it comes to mitigating the damage caused by the pandemic erupted last month after finance ministers agreed the package of measures, in the process rejecting the concept of coronabonds – whereby costs would be spread across the bloc – which was being pushed by Italian Prime Minister Giuseppe Conte among others.
After the decision, Mr Conte said: “At the European Council I will not sign anything until I have a set of measures that are adequate to tackle the challenge we face.”
Speaking to Express.co.uk last month, Mark Littlewood, director-general of the Institute for Economic Affairs, likewise suggested there was a risk of countries in southern Europe embarking of high levels of public spending if given the opportunity.
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Assessing the idea of debt mutualisation – which is essentially what issuing coronabonds would involve – Mr Littlewood said such an approach would risk what economists refer to as “moral hazard”.
He added: “If you think someone else is responsible – or part responsible – for bailing you out, you act less responsibly.
“Mutualising EU borrowing could have this effect.
“The danger would be that some nations would think they can turn on the spending taps and send the bill (or some part of the bill) to Germany.
“Even serious consideration of these ideas can be dangerous.
“If I think there’s say a 30 percent chance that somebody else will clear my credit card bill, I’m likely to be more reckless – even though there is no guarantee they will do so.
“So it would be wise to nip these things in the bud.”
Also speaking to Express.co.uk last month, former MEP Hans-Olaf Henkel, said: “The coronavirus has now been used as a pretext to introduce a gross violation of the European Stability Mechanism agreement and a clear first step towards a European Unemployment Scheme through the financial support of short working hours (‘Kurzarbeitergeld’).
“These are all steps towards the Europeanisation and socialisation of risks taken by national politicians. If all are responsible then no one is responsible in the end.
“If on top of that, if primarily due to French pressure, the eurozone agrees to a ‘reconstruction fund’ based on eurobonds – or now called coronabonds – all flood gates for irresponsible financial and economic policies are open.”
(Additional reporting by Monika Pallenberg)
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