Italy’s Conte threatens to derail EU summit over corona bonds

Italian Prime Minister Giuseppe Conte threatened to block a planned statement from EU leaders on their response to the coronavirus crisis unless they agree to use so-called corona bonds to help with economic recovery.

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His warning on Friday evening raises the stakes ahead of a videoconference of EU leaders on April 23, during which they plan to discuss and endorse a deal that finance ministers struck on Thursday evening to provide more than €500 billion of financial assistance.

Conte said in a televised speech that the deal was just "a first step" and stressed he wanted a "more ambitious" solution by pooling eurozone debt risk via corona bonds, or eurobonds.

"We will fight to get the eurobonds," Conte said, adding: "I will not sign [a statement of EU leaders at the end of the meeting] until I have a panoply of adequate instruments for the challenge that we are facing."

His remarks do, however, leave some room for maneuver as the deal reached by finance ministers already includes several instruments of financial assistance: the European Stability Mechanism (ESM), the European Investment Bank, an unemployment reassurance scheme and the next EU budget.

Germany, the Netherlands, Austria and Finland are strongly opposed to eurobonds and have pushed for using the ESM and other tools instead.

However, the ESM has become a political bugbear in Italy, the European country most affected by the coronavirus crisis, as it is associated with fiscal oversight and other conditions imposed by Brussels.

Conte insisted that Italy "does not need the ESM" and called it "a completely inadequate and inappropriate instrument for the emergency we are facing."

The prime minister said that he wanted to introduce eurobonds via a European fund — a solution proposed by France — and praised Thursday's deal for mentioning such an idea "for the first time."

Dutch Finance Minister Wopke Hoekstra, however, told reporters on Thursday "that eurobonds are not coming."

During his speech on Friday evening, Conte also announced that Italy's lockdown measures will be extended until May 3, although certain shops will be allowed to reopen as of Tuesday.