Twelve years after the 2008 financial crisis, the future of the EU is in question again as the coronavirus pandemic has exposed deep internal divisions at a time when a common solution is desperately needed.Last week, EU member states failed to reach a compromise on debt-sharing for the third time amid the economic slowdown. Nine EU countries, namely, Spain, Italy, France, Belgium, Luxembourg, Ireland, Portugal, Greece, and Slovenia are urging Brussels to issue so-called “coronabonds” – a common debt instrument aimed at raising funds on the market.
However, the so-called “Frugal Four”, Germany, the Netherlands, Austria, and Finland, are resisting the measure.
According to leading economist and former Greek Financial Minister Yanis Varoufakis, the eurozone might soon “blow up” if nothing is done.
In a video posted on the YouTube channel of his pan-European political movement ‘Democracy in Europe Movement 2025 (DiEM25)’, Mr Varoufakis has come up with a three-point plan for dealing with COVID-19 and avert the post-coronavirus depression.
The Greek politician said: “The COVID-19 pandemic is the greatest test of the European project in the history of the Union – and we are failing.
“Solidarity was meant to be a foundational principle of the EU.
“But solidarity is missing at the moment it is most needed.
“COVID-19 has revealed a fundamental truth: Europe is only as healthy as its sickest resident, only as prosperous as its most bankrupted.
“DiEM25 has taken it upon itself, like we have done before, to offer a three-point plan to protect all EU residents, to avert an economic depression and prevent the collapse of the European Union.”
The first step, Mr Varoufakis said, is that the European Central Bank (ECB) must be the institution to issue eurobonds, or otherwise known as coronabonds.
He noted: “Eurobonds need to be of at least one trillion euros and for thirty years.
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“A long maturity eurobond issued by the ECB.
“Why the ECB?
“Well, what institutions do we have that issue eurobonds?
“We have the European Stability Mechanism but we don’t want that as it is a poisonous institution.
“Mainly because in order to borrow from it, you need to sign a MOU – a memorandum of understanding. A Troika deal.
“You basically have to become Greece to get a penny out of the ESM.”
The second step, according to Mr Varoufakis, is that the ECB must inject €2000 (£1757) in every bank account across Europe.
The economist noted that EU citizens should not let anyone tell them it cannot be done, as the same thing has happened in Hong Kong two weeks ago and in Australia in 2008.
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Mr Varoufakis added: “The third step is that the EU must create a European Green Recovery and Investment programme to be funded by the European Investment Bank.
“Five percent of EU GDP must be issued in bonds every year to be supported in the bond markets by the ECB.
“This creates a very nice fund of €600billion (£527billon) every year to be invested in the things that society needs.
“For example, the green energy union that we don’t have and we should have. Public health and public education.”
If the DiEM25’s 3-Point Action Plan is implemented, Mr Varoufakis said, Europe will have a chance to become a genuine, democratic Union.
If not, the only other option, he noted, is disintegration.
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