Paris (AFP)

The Franco-German couple proposed Monday a stimulus plan of 500 billion euros to help the European Union overcome the historic crisis caused by the coronavirus pandemic, via an unprecedented mechanism for pooling European debt.

"To support a sustainable recovery that restores and strengthens growth in the EU, Germany and France support the creation of an ambitious, temporary and targeted stimulus fund" as part of the next endowed EU budget " 500 billion euros, "said a joint statement.

New element in European construction: Paris and Berlin propose that this support be financed by loans from the Commission on the markets "on behalf of the EU".

This money will then be transferred into "budgetary expenditure" to European countries and "to the sectors and regions most affected", underlines the declaration.

"These 500 billion will not be reimbursed by the beneficiaries of those who use this money," said French President Emmanuel Macron in a joint press conference with German Chancellor Angela Merkel.

"These will not be loans but direct endowments" to the countries most affected, he insisted.

The political significance of such a proposal is very strong, for an EU which was torn apart, almost to the breaking point, during the financial crisis and the Grexit, on the thorny question of the mutualisation of debts.

"It's really, really important," said Jacob F Kirkegaard of the Peterson institute for International Economics on Twitter. "Historical signal" for Henrik Enderlein, director of the Jacques Delors Center in Berlin.

For economist Jean Pisani-Ferry, it is a "reboot +" for the Franco-German couple. Impressive. Now begins the hardest part: the negotiation of the EU-27 ".

- Austria wants "loans" -

Such a plan would thus constitute an unprecedented step towards a pooling of debt at European level, to which Berlin but also countries of northern Europe have long been hostile.

These 500 billion would be added to the approximately 500 billion already decided by the finance ministers of the euro zone and made up of lending capacities in particular.

In total, Europe would therefore release around 1,000 billion euros to counter the historic recession looming for 2020 in the euro area (-7.7% according to the latest Commission forecasts).

It now remains for the Franco-German couple to convince all of the EU member states.

The 27-member negotiation could be tricky, following the traditional dividing lines of the Union between "North" and "South" countries.

Austrian Chancellor Sebastian Kurz reacted on Twitter by saying that he was in favor of "loans", and that he did not want an increase in the EU budget but a redistribution of his resources.

He met on this subject with the leaders of Denmark, the Netherlands and Sweden, other countries likely to oppose the Franco-German proposal.

In the entourage of Italian Prime Minister Giuseppe Conte, we welcome the Franco-German proposal "a step in the right direction, which Italy had hoped for from the start".

- "Hamiltonian moment"? -

The President of the European Commission, Ursula von der Leyen, for her part, "was delighted with the constructive proposal from France and Germany".

It must itself present on 27 May its own plan for the economic recovery of the EU.

"This (Franco-German) proposal is in line with that prepared by the Commission, which will also take into account the views of all the Member States and the European Parliament," she added.

From this united Europe, must be born a "Europe of health", also wanted Paris and Berlin.

"Our aim is to provide Europe with very concrete skills in the field of health. With common stocks of masks and tests, joint and coordinated purchasing capacities for treatments and vaccines, shared prevention plans for epidemics , common methods to identify cases. This Europe of health never existed, it must become our priority ", launched Mr. Macron.

For Enderlein, "what matters most today is that France and Germany agree that in a crisis, the EU can issue its own debt on a large scale. The political signal is that the "EU is more than a group of nation states and has its own federal identity. We may have witnessed a Hamiltonian moment", in reference to Alexander Hamilton, secretary of the Treasury who was one of the fathers of American federalism by centralizing state debts in the 1790s.

jri-ylf-pid-fz / bh

© 2020 AFP