Breton and Gentiloni’s EU bonds proposal receives cool reception

Spokesperson says President Ursula von der Leyen does not back the plan.

A call by two European commissioners to tackle the coronavirus crisis with long-term financial bonds received a cool reception from their boss on Monday, with the Commission’s chief spokesperson making clear that President Ursula von der Leyen was not on board.

In an opinion piece in several European newspapers, commissioners Thierry Breton (internal market) and Paolo Gentiloni (economy) called for a European fund to issue such bonds. They said that EU countries “must now show a common spirit of decision and innovation,” stressing that “time is running out” to do so.

But Commission spokesperson Eric Mamer said von der Leyen preferred a different approach. The Commission chief had previously dismissed bonds to pool debt risks and instead pushed for using the EU budget as a “Marshall Plan for Europe.”

“The president of the Commission has, on several occasions, expressed her point of view that the best way to activate the massive investments Europe needs … is via an ambitious and innovative [EU budget],” Mamer said. He admitted, however, that the Commission had not yet adopted a common position on the issue.

Breton and Gentiloni’s plan echoes a proposal made by French Finance Minister Bruno Le Maire last week, which caused some frustration in Brussels that the commissioners had seemingly thrown their weight behind Paris instead of championing von der Leyen’s proposal.

One concern is that if EU countries were to back a European fund, this would undermine their willingness to also finance an ambitious EU budget. An EU diplomat said the op-ed had weakened von der Leyen’s authority since it gave the impression that commissioners were not following the president’s line but instead pushing their own member states’ interests.

“[Breton] is coordinating relatively little with others and sometimes misses the mark,” a Commission official, who didn’t want to be named, said.

Breton and Gentiloni wrote in their op-ed that there might be some compatibility with the president’s scheme. They said the proposed fund would “make it possible to anticipate and then supplement the increase in the EU budget that von der Leyen has called for.”

They also said the fund could partially be financed by money from taxation and suggested creating “a governance system that would avoid any moral hazard, particularly with regard to the objectives of the financing, which could be strictly limited to joint investments for economic recovery linked to the current crisis.”

In another opinion piece, in German newspaper Frankfurter Allgemeine Zeitung, the president of the German parliament, Wolfgang Schäuble, and his French counterpart Richard Ferrand proposed a different approach.

They called for “mobilizing and extending” the EU budget, European Investment Bank loans and the European Stability Mechanism (set up to help eurozone countries “in severe financial distress”) “with all the flexibility they offer.”

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