display

It was an interview that should cause a stir.

"Europe must cancel the Covid debt," headlined the Italian daily "La Repubblica", a partner newspaper of WELT, in an interview with David Sassoli, President of the European Parliament.

The conversation with the Italian politician, which was printed last week, also raised the question of whether it was not time for a haircut for Italy.

In the interview itself, which was also published by WELT, Sassoli does not repeat this request, but declares that a haircut is generally worth considering.

“That's an interesting working hypothesis,” he says cautiously.

display

It is not certain whether the much clearer headline was coordinated with him; in any case, the interview in Italy fueled the discussion about debt relief for the country.

Critics complain about "cheapest populism"

Italian economists have been discussing debt relief for their country for a long time, because the state-funded aid programs in the Corona crisis are causing the already high national debt to rise to a level previously unimaginable.

The European Commission expects the country's national debt to reach 160 percent of economic output this year.

In view of this development, German economists also called for partial debt relief for the country in the spring in WELT AM SONNTAG.

display

From the European Parliament, however, there is criticism of this idea and of Sassoli's statements.

"Considerations about a haircut for Italy are the cheapest populism and also extremely dangerous," warns the Green MP Sven Giegold.

"Such statements drive Europe apart and Sassoli, as President of the European Parliament, should not take part in such destructive debates."

The content of the discussion is not justified anyway, said the financial politician.

There are no indications that the ultra-low interest rates could rise again in the foreseeable future, and the low interest burden means that Italy's national debt is still sustainable.

Warning of "great inflation"

The CSU European MP Markus Ferber said that a haircut could even backfire.

“When Sassoli calls for the cancellation of debts, he speaks out against an Italian default,” says the financial politician.

display

Should Italy do that, he hoped that he would have fun ever placing a bond on the financial markets again.

“What we will then see would make the Greek sovereign debt crisis a few years ago fade,” says Ferber.

Hans-Werner Sinn, the contentious former president of the Munich Ifo Institute, also reacts sharply to Sassoli's proposal: "David Sassoli has made a stupid suggestion that tramples on the Maastricht Treaty," says Sinn.

All the money is in circulation because the central bank bought the Italian government bonds.

If these papers are now devalued, the purchase can never be reversed.

“The money stays in circulation even when it is no longer needed.

The result is then at some point a large inflation, ”says Sinn.

In his view, a haircut means that the money holders, i.e. all citizens in Europe, have to pay for the cancellation of the Italian national debt.

"Existential threat to the euro zone"

The CDU Economic Council is also alarmed by Sassoli's statements.

“Contrary to what Sassoli suggests, Europe and Italy are no miracle solutions.

Rather, such demands must be a warning to fundamentally question the previous rescue policy, ”says Wolfgang Steiger, Secretary General of the Economic Council.

For years it has become apparent that the catastrophic budget situation in Italy could quickly develop into an existential threat to the euro zone in the event of a new crisis.

"Those who can rely on help in an emergency lose the incentive to avert an impending financial emergency on their own," says Steiger.

In the “La Repubblica” interview, Sassoli also fueled the debate on a European debt union.

The occasion is the resolution of the heads of state and government of the EU at their marathon summit in July, which stipulates that the EU Commission should take on EUR 750 billion in debt for EU corona aid.

It is a novelty that the EU is incurring joint debts on such a scale.

display

Immediately after the agreement, Chancellor Angela Merkel (CDU) and other heads of government such as the Dutchman Mark Rutte assured their voters at home that borrowing should remain a one-off event and that it was by no means the start of a permanent debt union.

In the weeks that followed, however, European politicians spoke out who wanted to establish joint debt as an integral part of the EU.

A month ago, for example, Christine Lagarde, the President of the European Central Bank, called for the Corona Reconstruction Fund to be made permanent.

And it was only in September that the French finance minister Bruno Le Maire had advertised in WELT AM SONNTAG that the work of the reconstruction fund should be assessed in order to then decide whether to keep the instrument.

France also wants to borrow jointly

France has long wanted common European debts and has used the outbreak of the corona pandemic and the economic crisis triggered by the distance measures to promote the idea of ​​euro bonds, bonds issued jointly by the EU countries.

But so far Paris has not been able to assert itself.

Parliament President Sassoli now repeated Lagarde's request.

The joint borrowing should be made permanent, he said in the interview last week.

His announcement was not entirely surprising, but the reactions followed promptly.

"With this demand, Sassoli shows quite blatantly that he sees the development fund as the first step into the transfer union," says Markus Ferber, the spokesman for the conservative EPP group in the European Parliament's Economic and Monetary Committee.

"That has always been an Italian interest, and now some people in Rome believe that the door has been opened a little bit by the corona pandemic."

The dispute over a debt union divides Europe.

Leading European politicians have categorically rejected the idea in recent weeks, such as Austria's Federal Chancellor Sebastian Kurz.

Paschal Donohoe, the president of the Eurogroup, who has to mediate between the euro finance ministers, did not want to commit himself to a position recently in a conversation with WELT.

"We could discuss in Europe to keep this instrument," said the Irish politician earlier this month.

"But right now the rebuilding plan is the answer to an unprecedented crisis, and everything else will tell in the future."

Olaf Scholz praises Corona reconstruction fund

There are also voices within the federal government who can, at least in the medium term, envision a communitisation of the debt.

The most prominent representative is the Federal Minister of Finance and Vice Chancellor Olaf Scholz (SPD).

In the past few months, he has repeatedly spoken of the fact that joint borrowing in Europe with the Corona reconstruction fund is not a crisis-related flash in the pan.

display

"The reconstruction fund is a real step forward for Germany and Europe that cannot be turned back," says the man who wants to be elected Chancellor next year.

He sees this as an important step on the way to the United States of Europe.

Scholz sees the former US Treasury Secretary Alexander Hamilton as a role model, who in 1790 bundled the competencies at the level of the central government, which in addition to common income of the American states also included an independent debt capacity.

The Green politician Sven Giegold also sees the possibility of the EU to incur joint debts as fundamentally positive.

“Collecting taxes and issuing debts and investing together;

basically strengthens Europe, ”says the financial politician.

Much, however, depends on whether the money is also spent sensibly - and the reconstruction fund has yet to prove that before one can think about a common European fiscal policy.

Assistance: Michael Höfling