After all-night talks, European finance ministers from the 19 countries that use the euro failed to agree on a program to support the European Union's coronavirus-stricken economies.
"After 16 hours of discussions, we came close to a deal but we are not there yet," Portuguese Finance Minister Mario Centeno, the Eurogroup president, said on Twitter Wednesday morning. "I suspended the Eurogroup [and we will] continue tomorrow."
The latest failure to agree on how the 500 billion-euro ($543 billion) recovery program would be structured once again exposed the continent's inherent north-south divide. Media outlets cited a standoff between Europe's financially struggling southern countries, led by Italy, and some fiscally conservative northern nations, led by the Netherlands, as the reason for breakdown of talks.
After 16h of discussions we came close to a deal but we are not there yet.— Mário Centeno (@mariofcenteno) April 8, 2020
I suspended the #Eurogroup & continue tomorrow, thu.
My goal remains: A strong EU safety net against fallout of #covid19 (to shield workers, firms &countries)& commit/ to a sizeable recovery plan pic.twitter.com/kGHoURgdrv
The France 24 news channel reported that the two camps sparred over the terms and conditions attached to eurozone credit for governments. At issue is the Italian demand that loans be free of any requirement for fiscal reform, and the Netherlands' refusal to countenance that.
A meeting of EU leaders last month also failed to reach an agreement on the best economic response to the coronavirus outbreak.
"What's at stake is the survival of the European project," French President Emmanuel Macron told his EU counterparts during last month's negotiations.
Much of the acrimony surrounding the EU's north-south divide dates from the European debt crisis, which began nearly a decade ago, when strict austerity measures were imposed on many of the continent's southern countries
Italy and Greece are still recovering from the lingering effects of that crisis, but now the current pandemic is inflicting a further heavy toll on their economies.
"This is a crucial issue on which the European Union's future is at stake," Spanish Agriculture Minister Luis Planas said on Wednesday.
Closed borders, travel restrictions and the shutdown of restaurants and bars have been implemented across most of Europe in an attempt to combat the spread of the coronavirus. The impact of these measures is more severely felt in the southern countries, where tourism accounts for a higher share of nations' gross domestic product.
Still, there have been calls for the EU to overcome its fiscal north-south divide. In an plea published earlier this week in newspapers in France, Italy, Spain, Portugal and Greece, Germany's Foreign Minister Heiko Maas and Finance Minister Olaf Schloz called for swift actions to secure Europe's financial stability.
"We need a clear expression of European solidarity in the corona pandemic," they wrote. "The funds must not come with any unnecessary conditions attached, as that would be tantamount to a rerun of the austerity policy that followed the financial crisis and would lead to unequal treatment between individual member states."