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A €750 Billion Virus Recovery Plan Thrusts Europe Into a New Frontier A €750 Billion Virus Recovery Plan Thrusts Europe Into a New Frontier
(3 days later)
BRUSSELS — For decades, even when the 2008 financial crisis threatened to blow the bloc apart, the European Union’s wealthier nations resisted the notion of collective debt. But the coronavirus has so fundamentally damaged the bloc’s economy that it is now forcing European leaders to consider the sort of unified and sweeping response once thought unworkable.BRUSSELS — For decades, even when the 2008 financial crisis threatened to blow the bloc apart, the European Union’s wealthier nations resisted the notion of collective debt. But the coronavirus has so fundamentally damaged the bloc’s economy that it is now forcing European leaders to consider the sort of unified and sweeping response once thought unworkable.
The European Commission, the bloc’s executive branch, on Wednesday proposed that it raise 750 billion euros, or $826 billion, on behalf of all members to finance their recovery from the economic collapse brought on by the virus, the worst crisis in the history of the European Union.The European Commission, the bloc’s executive branch, on Wednesday proposed that it raise 750 billion euros, or $826 billion, on behalf of all members to finance their recovery from the economic collapse brought on by the virus, the worst crisis in the history of the European Union.
The plan, which still requires approval from the 27 national leaders and their parliaments, would be the first time that the bloc raised large amounts of common debt in capital markets, taking the E.U. one step closer to a shared budget, potentially paid for through common taxes.The plan, which still requires approval from the 27 national leaders and their parliaments, would be the first time that the bloc raised large amounts of common debt in capital markets, taking the E.U. one step closer to a shared budget, potentially paid for through common taxes.
For those reasons, the proposal had all the hallmarks of a historic moment for the E.U., vesting greater authority in Brussels in ways that more closely than ever resembled a central government.For those reasons, the proposal had all the hallmarks of a historic moment for the E.U., vesting greater authority in Brussels in ways that more closely than ever resembled a central government.
“This is about all of us and it is way bigger than any one of us,” Ursula von der Leyen, the commission president, told European Parliament members in a speech in Brussels. “This is Europe’s moment.”“This is about all of us and it is way bigger than any one of us,” Ursula von der Leyen, the commission president, told European Parliament members in a speech in Brussels. “This is Europe’s moment.”
At another moment — one without a calamitous recession looming — the proposal would probably have been dead on arrival and antagonized the populists and nationalists who oppose the gathering power of Brussels. But the urgent need for a powerful response to the virus has muted much of the appeal of that message, at least for now.At another moment — one without a calamitous recession looming — the proposal would probably have been dead on arrival and antagonized the populists and nationalists who oppose the gathering power of Brussels. But the urgent need for a powerful response to the virus has muted much of the appeal of that message, at least for now.
There is little question that Europe’s recovery will be difficult and cost trillions, with some of its economies set to shrink by as much as 10 percent this year. The friction between China and the United States also poses a major challenge for a bloc that trades heavily with both.There is little question that Europe’s recovery will be difficult and cost trillions, with some of its economies set to shrink by as much as 10 percent this year. The friction between China and the United States also poses a major challenge for a bloc that trades heavily with both.
Until now, the European Central Bank had been propping up the economy by sweeping up bonds by member states at low cost to ensure money keeps flowing in to finance stimulus efforts. But the economic crisis is so large that anything less than a bold response from European Union leaders risked inviting another kind of crisis — one of legitimacy.Until now, the European Central Bank had been propping up the economy by sweeping up bonds by member states at low cost to ensure money keeps flowing in to finance stimulus efforts. But the economic crisis is so large that anything less than a bold response from European Union leaders risked inviting another kind of crisis — one of legitimacy.
With Britain gone, the calamity brought on by the virus forced Germany and France, the bloc’s two strongest countries that often find themselves at loggerheads, to step up in a rare display of joint leadership, paving the way for the commission’s proposal.With Britain gone, the calamity brought on by the virus forced Germany and France, the bloc’s two strongest countries that often find themselves at loggerheads, to step up in a rare display of joint leadership, paving the way for the commission’s proposal.
Even so, the plan is bound to be watered down in the weeks and months ahead. The proposal requires unanimous backing by member states, and a handful of the richer and less affected ones, such as the Netherlands and Denmark, consider joint borrowing and grant distribution to be unfair.Even so, the plan is bound to be watered down in the weeks and months ahead. The proposal requires unanimous backing by member states, and a handful of the richer and less affected ones, such as the Netherlands and Denmark, consider joint borrowing and grant distribution to be unfair.
“We need to take everyone’s interests into account and there are very different interest groups: the southern countries, who fundamentally always want more; the East Europeans, who have an interest in preventing everything from flowing south; and, of course, those who have to pay for it all, the net payers,” Sebastian Kurz, the Austrian chancellor, who opposes parts of the commission’s proposal, told Politico on Wednesday.“We need to take everyone’s interests into account and there are very different interest groups: the southern countries, who fundamentally always want more; the East Europeans, who have an interest in preventing everything from flowing south; and, of course, those who have to pay for it all, the net payers,” Sebastian Kurz, the Austrian chancellor, who opposes parts of the commission’s proposal, told Politico on Wednesday.
But the countries hardest hit by the virus, namely Italy and Spain, are also too big and too central to the European Union’s ambitions to let fail. For now the plan not only suggested large-scale joint borrowing, but also that most of the money raised be distributed in the form of grants, or free cash.But the countries hardest hit by the virus, namely Italy and Spain, are also too big and too central to the European Union’s ambitions to let fail. For now the plan not only suggested large-scale joint borrowing, but also that most of the money raised be distributed in the form of grants, or free cash.
The €750 billion raised would be split in two pots, the commission said. One would include €500 billion to be distributed as grants to all countries based on their recovery needs, with Italy getting the biggest slice and Spain the second biggest. This means the money would be free, with no repayment demanded and no strings attached, and would not count toward national debt levels.The €750 billion raised would be split in two pots, the commission said. One would include €500 billion to be distributed as grants to all countries based on their recovery needs, with Italy getting the biggest slice and Spain the second biggest. This means the money would be free, with no repayment demanded and no strings attached, and would not count toward national debt levels.
Another pot of €250 billion would be made available in the form of loans to countries that apply for them, coming with more scrutiny and conditions, and would be added to a country’s debt load.Another pot of €250 billion would be made available in the form of loans to countries that apply for them, coming with more scrutiny and conditions, and would be added to a country’s debt load.
At the heart of the commission’s plan is the idea of using some of its own budget to issue bonds, a move it’s made only a handful of times for smaller amounts in the past. The institution, which has a Triple-A rating, the best possible, from ratings agencies, said it could levy its own taxes to repay those bonds, which will have a maximum 30-year maturity.At the heart of the commission’s plan is the idea of using some of its own budget to issue bonds, a move it’s made only a handful of times for smaller amounts in the past. The institution, which has a Triple-A rating, the best possible, from ratings agencies, said it could levy its own taxes to repay those bonds, which will have a maximum 30-year maturity.
The European Commission itself will be greatly empowered if its proposal goes through, not only because it will be able to issue bonds in the markets, but also because any powers to raise taxes directly will give it more of the semblance of a federal government, which it currently lacks, as it depends almost entirely on member state contributions for its budget.The European Commission itself will be greatly empowered if its proposal goes through, not only because it will be able to issue bonds in the markets, but also because any powers to raise taxes directly will give it more of the semblance of a federal government, which it currently lacks, as it depends almost entirely on member state contributions for its budget.
If members don’t grant the commission powers to raise its own taxes directly to repay the bonds, officials said they would need to pay bigger contributions into its budget, or see some of the programs it funds shrink or die to free up funds instead.If members don’t grant the commission powers to raise its own taxes directly to repay the bonds, officials said they would need to pay bigger contributions into its budget, or see some of the programs it funds shrink or die to free up funds instead.
Some see this move as a great step forward in deepening the economic binds that tie European Union members and bringing them closer to a United States of Europe. But experts warned that, while important, this is not a leap into mutualized debt, like in the United States.Some see this move as a great step forward in deepening the economic binds that tie European Union members and bringing them closer to a United States of Europe. But experts warned that, while important, this is not a leap into mutualized debt, like in the United States.
“We don’t become a federal Europe, however the proposal is a big deal in terms of the architecture of the European Union,” said Maria Demertzis of the Brussels-based think tank Bruegel. “If Europe is considering to issue common debt and to raise taxes to back this debt up, then we’re talking about a big deal.”“We don’t become a federal Europe, however the proposal is a big deal in terms of the architecture of the European Union,” said Maria Demertzis of the Brussels-based think tank Bruegel. “If Europe is considering to issue common debt and to raise taxes to back this debt up, then we’re talking about a big deal.”
But real debt mutualization would see Germany guaranteeing Italy’s debt, for example, said Mujtaba Rahman, who heads the Europe practice at Eurasia Group, a political risk consultancy.But real debt mutualization would see Germany guaranteeing Italy’s debt, for example, said Mujtaba Rahman, who heads the Europe practice at Eurasia Group, a political risk consultancy.
“Von der Leyen’s announcement today is a very important step, but only one on what will prove a long and windy road toward genuine debt mutualization in the European Union,” Mr. Rahman said.“Von der Leyen’s announcement today is a very important step, but only one on what will prove a long and windy road toward genuine debt mutualization in the European Union,” Mr. Rahman said.
“Berlin would demand a veto over Italian budgetary choices as the quid pro quo, and the European Union is nowhere near mature enough politically for such a system just yet,” he added.“Berlin would demand a veto over Italian budgetary choices as the quid pro quo, and the European Union is nowhere near mature enough politically for such a system just yet,” he added.
The proposal pushed forward Wednesday sidesteps some of those stickier issues by making the European Commission the guarantor of any debt, rather than individual nations, something resisted in Germany and elsewhere and legally unacceptable under the current setup of the bloc.The proposal pushed forward Wednesday sidesteps some of those stickier issues by making the European Commission the guarantor of any debt, rather than individual nations, something resisted in Germany and elsewhere and legally unacceptable under the current setup of the bloc.
But both Chancellor Angela Merkel of Germany and President Emmanuel Macron of France recognized that allowing some E.U. countries to recover faster and stronger would only deepen inequalities in the bloc, hampering the way it trades and operates internally.But both Chancellor Angela Merkel of Germany and President Emmanuel Macron of France recognized that allowing some E.U. countries to recover faster and stronger would only deepen inequalities in the bloc, hampering the way it trades and operates internally.
Updated June 5, 2020Updated June 5, 2020
A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study.
The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April.The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April.
Mass protests against police brutality that have brought thousands of people onto the streets in cities across America are raising the specter of new coronavirus outbreaks, prompting political leaders, physicians and public health experts to warn that the crowds could cause a surge in cases. While many political leaders affirmed the right of protesters to express themselves, they urged the demonstrators to wear face masks and maintain social distancing, both to protect themselves and to prevent further community spread of the virus. Some infectious disease experts were reassured by the fact that the protests were held outdoors, saying the open air settings could mitigate the risk of transmission.Mass protests against police brutality that have brought thousands of people onto the streets in cities across America are raising the specter of new coronavirus outbreaks, prompting political leaders, physicians and public health experts to warn that the crowds could cause a surge in cases. While many political leaders affirmed the right of protesters to express themselves, they urged the demonstrators to wear face masks and maintain social distancing, both to protect themselves and to prevent further community spread of the virus. Some infectious disease experts were reassured by the fact that the protests were held outdoors, saying the open air settings could mitigate the risk of transmission.
Exercise researchers and physicians have some blunt advice for those of us aiming to return to regular exercise now: Start slowly and then rev up your workouts, also slowly. American adults tended to be about 12 percent less active after the stay-at-home mandates began in March than they were in January. But there are steps you can take to ease your way back into regular exercise safely. First, “start at no more than 50 percent of the exercise you were doing before Covid,” says Dr. Monica Rho, the chief of musculoskeletal medicine at the Shirley Ryan AbilityLab in Chicago. Thread in some preparatory squats, too, she advises. “When you haven’t been exercising, you lose muscle mass.” Expect some muscle twinges after these preliminary, post-lockdown sessions, especially a day or two later. But sudden or increasing pain during exercise is a clarion call to stop and return home.Exercise researchers and physicians have some blunt advice for those of us aiming to return to regular exercise now: Start slowly and then rev up your workouts, also slowly. American adults tended to be about 12 percent less active after the stay-at-home mandates began in March than they were in January. But there are steps you can take to ease your way back into regular exercise safely. First, “start at no more than 50 percent of the exercise you were doing before Covid,” says Dr. Monica Rho, the chief of musculoskeletal medicine at the Shirley Ryan AbilityLab in Chicago. Thread in some preparatory squats, too, she advises. “When you haven’t been exercising, you lose muscle mass.” Expect some muscle twinges after these preliminary, post-lockdown sessions, especially a day or two later. But sudden or increasing pain during exercise is a clarion call to stop and return home.
States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people.States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people.
Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks.Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks.
Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days.Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days.
If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.)If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.)
Taking one’s temperature to look for signs of fever is not as easy as it sounds, as “normal” temperature numbers can vary, but generally, keep an eye out for a temperature of 100.5 degrees Fahrenheit or higher. If you don’t have a thermometer (they can be pricey these days), there are other ways to figure out if you have a fever, or are at risk of Covid-19 complications.Taking one’s temperature to look for signs of fever is not as easy as it sounds, as “normal” temperature numbers can vary, but generally, keep an eye out for a temperature of 100.5 degrees Fahrenheit or higher. If you don’t have a thermometer (they can be pricey these days), there are other ways to figure out if you have a fever, or are at risk of Covid-19 complications.
The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing.The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing.
If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.
If you’re sick and you think you’ve been exposed to the new coronavirus, the C.D.C. recommends that you call your healthcare provider and explain your symptoms and fears. They will decide if you need to be tested. Keep in mind that there’s a chance — because of a lack of testing kits or because you’re asymptomatic, for instance — you won’t be able to get tested.If you’re sick and you think you’ve been exposed to the new coronavirus, the C.D.C. recommends that you call your healthcare provider and explain your symptoms and fears. They will decide if you need to be tested. Keep in mind that there’s a chance — because of a lack of testing kits or because you’re asymptomatic, for instance — you won’t be able to get tested.
Ms. von der Leyen, too, stressed that it’s crucial for the recovery to be even across the bloc.Ms. von der Leyen, too, stressed that it’s crucial for the recovery to be even across the bloc.
Most of the onus on financing the recovery is still falling on national governments, and will continue to, even if the commission proposal is endorsed. Germany and other wealthy countries have their own ample funds to draw from to quickly prop up their economies and don’t need European Union funding.Most of the onus on financing the recovery is still falling on national governments, and will continue to, even if the commission proposal is endorsed. Germany and other wealthy countries have their own ample funds to draw from to quickly prop up their economies and don’t need European Union funding.
Germany has deployed more than a trillion euros to support its economy, even cutting checks to out-of-work freelancers and bailing out and renationalizing a share of its national flag carrier, Lufthansa.Germany has deployed more than a trillion euros to support its economy, even cutting checks to out-of-work freelancers and bailing out and renationalizing a share of its national flag carrier, Lufthansa.
But other nations, in particular those with fewer resources or still hobbling from the last crisis, need European Union funding more as they face depleted coffers and expensive borrowing in markets.But other nations, in particular those with fewer resources or still hobbling from the last crisis, need European Union funding more as they face depleted coffers and expensive borrowing in markets.
The European Commission also made €540 billion available earlier in the crisis for members to finance unemployment benefits, small businesses and the rebuilding of their health care systems.The European Commission also made €540 billion available earlier in the crisis for members to finance unemployment benefits, small businesses and the rebuilding of their health care systems.
A new president, on the job for less than a year and confronted with the worst recession in the European Union’s history, Ms. von der Leyen has been under considerable pressure to propose an ambitious plan to support the bloc’s recovery.A new president, on the job for less than a year and confronted with the worst recession in the European Union’s history, Ms. von der Leyen has been under considerable pressure to propose an ambitious plan to support the bloc’s recovery.
The rare Franco-German proposal, floated last week, gave Ms. von der Leyen the top backing she needed, but a Dutch diplomat swiftly noted Wednesday that her plan would still meet resistance in the continent’s wealthy north, paving the road for fraught negotiations among leaders starting next month.The rare Franco-German proposal, floated last week, gave Ms. von der Leyen the top backing she needed, but a Dutch diplomat swiftly noted Wednesday that her plan would still meet resistance in the continent’s wealthy north, paving the road for fraught negotiations among leaders starting next month.
Charles Michel, the president of the European Council who presides over the 27 leaders’ meetings, said there should be a session on June 19 to tackle the proposal, urging the heads of government to support Ms. von der Leyen’s pitch and quickly deploy this money where it’s needed.Charles Michel, the president of the European Council who presides over the 27 leaders’ meetings, said there should be a session on June 19 to tackle the proposal, urging the heads of government to support Ms. von der Leyen’s pitch and quickly deploy this money where it’s needed.
That sense of urgency may not be shared by all and the potential for a lengthy and messy approval process is a key problem with the Commission’s proposals, experts said.That sense of urgency may not be shared by all and the potential for a lengthy and messy approval process is a key problem with the Commission’s proposals, experts said.
“Its single biggest weakness is the fact that real money will only begin to flow where it’s needed most next year, raising a question about the economic picture in the second half of this year,” Mr. Rahman said.“Its single biggest weakness is the fact that real money will only begin to flow where it’s needed most next year, raising a question about the economic picture in the second half of this year,” Mr. Rahman said.