Marathon talks over a financial package to deal with an expected economic downturn from the coronavirus lockdowns are being extended.
Deep, longstanding divisions between northern and southern countries haven’t been changed by the crisis.
The 19 finance ministers from Eurozone countries can’t agree on how to share the economic burden of COVID-19 despite a marathon 14-hour video call through the night.
"Corona bonds", or "Euro bonds", are where the battle lays. Italy won’t sign up to any package without them. But the Dutch finance minister is the loudest voice in a group of northern Eurozone countries who don’t want to sign their government’s post-pandemic debt up with countries in the south.
“In their view they’ve been really careful over the past couple of years, they’ve built up a war chest of money to save for a rainy day and so they’re worried that other countries like Italy which didn’t do that work and now is in trouble, will sort of drag them all down if they all have to sort of stand behind these bonds," explains Megan Greene, an economist at Harvard Kennedy School.
The European Central Bank is buying €750 billion of government debt but insists that pooling debt together is also needed.
The European Commission is proposing a €100 billion scheme to back loans to companies to prevent them laying off workers.
Finance ministers are also struggling on to work the European Stability Mechanism into the solution - the bailout fund set up after 2008 financial crisis could be used to the tune of €400 billion.
Economists say the tools are there.
“If this explodes into a full blown Eurozone crisis then it would be a huge crisis, self-inflicted crisis that’s really totally unnecessary given where we stand," said Guntram Wolff, director of the Bruegel think tank in Brussels. "Strong policy response will allow us to manage this crisis and we have the scope and capacity to respond and we should really respond.”
Traditional north-south divides in the Eurozone will need to be overcome as finance ministers re-enter the video call on Thursday.