HASfter the 750 billion euros in loans and grants from the Next Generation EU plan, here is the 210 billion euros from the REPowerEU plan. Born of two emergencies, Covid-19 and the war in Ukraine, they have in common to aim for increased coordination of the industrial policies of the Member States in key sectors and to place, for the decades to come, the public investments of infrastructure at the heart of European economic integration.
However, if industrial policies and public infrastructure investments must be financed in an accelerated manner, we also need new forms of coordination in their financing. How can we move away from the deflationary rigor of the old stability pact towards a configuration in which the expansion of fiscal policy does not generate financial instability?
Also listen Ecological planning, what is it for?
It is a question of passing from a logic of competition between States with a view to accessing the financial markets, under the assumption of their flawless efficiency, to a logic of cooperation between the States vis-à-vis the markets, in order to prevent potential irrationality.
Such would be the task of a “European Debt Agency” (EDA), the idea of which was launched on 23 December 2021 in a grandstand of MM. Draghi and Macron at FinancialTimes. Arguing for new European rules that are more favorable to investments, the Italian and French leaders mention the project of a ” agency “ to manage the debts of the euro zone linked to Covid-19.
The German objection
But now, we must dare to go further. Because the situation in which Europe finds itself calls for no longer distinguishing between “normal” debt and “exceptional” debt. Nevertheless, the German objection to any pooling of the debt, reaffirmed by the Minister of Finance, Christian Lindner, in a maintenancein March, at Corriere della Seraretains its full meaning: each member country must remain responsible for its budgetary policy without asking for help from other countries, and above all from their taxpayers.
Is it possible to build an EDA that is both non-mutualistic and cooperative, capable of absorbing all the debt of the euro zone, past and future, and even of helping the transition of the European Union (EU) towards a central fiscal capacity? This is the configuration we offer since 2020, with a team of fellow economists in Italy and France.
The AED which, thanks to adequate capitalization, would benefit from a AAA rating, and therefore the best market rates, would issue its own securities fixed term, but it would lend the funds raised to member countries saccording to a perpetual loan scheme. This would allow all countries to protect themselves from the refinancing risk linked to market expectations which, as shown by the sovereign debt crisis in 2012, can seriously underestimate the “country risk” and impose unsustainable rates.
You have 48% of this article left to read. The following is for subscribers only.