“Following a recent agreement by the Eurogroup of eurozone finance ministers on a COVID-19 rescue package, Europe is well positioned to maintain liquidity for the time being but if it wants to avoid political fighting and set the stage for a post-pandemic recovery, it will need to go further,” ALDE Party Vice-President Luis Garicano  and former Belgian prime minister Guy Verhofstadt write in their joint op-ed for Project Syndicate, published on 15 April.

In their op-ed, Garicano and Verhofstadt welcome the arrival of a “eurozone-wide deal”, labeling it “a success in itself, considering the deep divisions of just a few weeks ago”. However, both warn that while there are financial options, such as the ESM and PEPP, the mounting debt is threatening to “hamper growth for decades to come” across Europe, and underline that the “critical issue should be addressed not through the mutualization of past or future debts, but with a common instrument that allows the European Union itself to incur the debt required to finance a massive investment and recovery program”.

To this end, Garicano and Verhofstadt propose that the European Commission should issue EU Consols(consolidated annuities) to finance a reconstruction package. Through this new European Reconstruction Fund – owned and operated by the European Commission, accountable only to the European Parliament – the focus could be on “advancing the shared priorities of all European citizens”, first helping the countries hit hardest by the pandemic, then helping “the private sector’s return to competitiveness, as well as investments in decarbonization, new transportation infrastructure, and research and innovation”.

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