Billionaire financier George Soros has warned that the coronavirus pandemic could threaten the survival of the European Union, if the bloc doesn’t issue perpetual bonds to support its weaker member states.
"If the EU is unable to consider it now, it may not be able to survive the challenges it currently confronts,” Soros said in a transcript of a question-and-answer session reported by Reuters. "This is not a theoretical possibility; it may be the tragic reality.”
Soros said he was especially concerned about Italy, saying: "What would be left of Europe without Italy? The relaxation of state aid rules, which favour Germany, has been particularly unfair to Italy, which was already the sick man of Europe and then the hardest hit by COVID-19.”
Soros added that the the EU needs to keep its AAA credit rating to issue the required amount debt, and therefore need to have the power to raise taxes to cover the cost of the bonds: "The taxes only have to be authorised; they don’t need to be implemented."
Italy was the first country in Europe to be brought low by the coronavirus pandemic. According to Johns Hopkins University data as of 22 May, the country has had 228,000 confirmed cases of the virus, and 32,486 deaths from COVID-19.
Italy, Spain, and France have been vocal in demanding joint-debt issuance, in the form of so-called “corona bonds” by the EU to spur economic recovery from the pandemic. Germany, Austria, and the Netherlands have long been staunchly opposed to debt mutualisation across the eurozone.
However, this week German chancellor Angela Merkel announced that she and French president Emmanuel Macron would jointly back a €500bn (£447bn) recovery fund, a common-debt instrument that would allow aid to be issued to the worst-hit EU member states in the form of grants rather than loans.
The fund would need the backing of all member states, and Austria said it would not support the proposal in its current form.
“Our position is clear: we want to show solidarity with states that were hit particularly hard by the crisis but we believe that loans are the right way, not grants,” Austrian chancellor Sebastian Kurz told a newspaper.