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Proposal Of 500 Billion Euro Fund To Support Economic Recovery Due To Covid-19: Efforts To Rebuild Europe

French President E.Macron online meeting with German Prime Minister A.Merkel on May 18.

During the past disagreements and efforts to prove the French-German alliance remains the mainstay of Europe, French President Emmanuel Macron and German Chancellor Angela Merkel have proposed a fund worth 500 billion euros (US $ 542 billion) to support the recovery of the European Union (EU) economy from the effects of the Covid-19 pandemic.

In a joint statement following an online meeting on May 18, two leaders of the two leading EU nations said that 500 billion euros would be taken to "the worst affected areas and localities" in block 27 members. 

Amid the continental economy facing the biggest challenge since World War II, President E.Macron acknowledged that the EU did not meet expectations in the initial response to the disease and needed close coordination tighter in the health field. Meanwhile, Prime Minister A. Merkel emphasized the need and fairness of the reconstruction fund, which is planned to be gradually repaid through some future EU budgets. 

Proposal of a 500 billion euro restoration fund that marks a major change in Germany, which has so far rejected Spain and Italy's call for a program called the "corona bond", which was controversialy argued. 

This is a collective debt mechanism to mitigate the economic impact on the Eurozone member states heavily affected by the Covid-19 pandemic.

The issuance of this joint debit bond will allow countries affected by the disease to mobilize funds in the financial markets under the auspices of the EU. Nine countries, including France, Italy and Spain, supported "corona bonds", but a number of countries, including Germany and the Netherlands, were firmly opposed because they did not want their economies associated with other countries. Southern Europe has a high level of public debt. 

This puts the EU in a state of disorganization before the worst health crisis ever. European Commission President Von der Leyen said that the French and German proposals were constructive, while Lucas Guttenberg, an expert at Hertie School of Management in Berlin, said that this is the right direction to fund for countries affected by the epidemic.

However, despite a broad agreement among EU members on emergency relief needs, differences that have previously occurred may delay the implementation of major recovery programs. In other words, the plans of A.Merkel and E.Macron will face tense negotiations between EU countries and then a vote in the European Parliament, which has targeted a package of support. Even bigger aids.

President E.Macron said there was still a disagreement between the governments of the EU countries on whether the fund proposed transferring subsidies or simply loans. 

According to the French leader, the increase in loans will have the opposite effect when increasing debt in countries such as Italy, Belgium and Greece. Therefore, in order to resolve the crisis, France proposed both the contribution block and the general debt guarantee. Austria, meanwhile, asserts that any help must be in the form of loans, not "free" grants.

Europe has just begun to reopen after a long period of imposition of blockade orders to prevent the spread of the SARS-CoV-2 virus, which has severely hurt regional economies. In this context, analysts said, the split of EU members is threatening the common market as well as the ability of economic recovery of the region. 

So, more than ever, this is the time when the EU must promote solidarity and find a way to quickly end the economic downturn that is covering the old continent.

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