Germany's Scholz sees 'no way back' from EU joint debt

German Finance Minister Olaf Scholz says European recovery package financed by joint borrowing was a long-term measure, not a short-term coronavirus crisis fix, as touted by Angela Merkel

by AFP
Germany's Scholz sees 'no way back' from EU joint debt
Olaf Scholz, Federal Minister of Finance and candidate for Chancellor of the SPD. Photo: Bernd Thissen / DPA via AFP.

German Finance Minister Olaf Scholz said on Sunday that the European Union's recovery package financed by joint borrowing was a long-term measure rather than a short-term coronavirus crisis fix, contradicting Chancellor Angela Merkel.

"The Recovery Fund is a real step forward for Germany and for Europe, one we won't go back on," Scholz, who is also the centre-left Social Democratic Party (SPD) candidate to succeed Merkel in 2021 elections, told the Funke newspaper group.

Steps taken under the plan, including EU nations agreeing to jointly issue debt "represent fundamental changes, perhaps the biggest changes since the introduction of the euro" single currency around the turn of the millennium, Scholz said.

"These steps forward will inevitably lead to a debate about joint resources for the EU, something that's a condition for an improved European Union that works better," he added.

Long and intense debates were needed before the 27 EU countries reached agreement in July on their historic 750-billion-euro ($885 billon) recovery scheme, more than half of which will be paid out as direct grants.

For the first time, leaders gave their green light to joint debt – an idea Germany had long rejected until the Covid-19 pandemic hobbled many European economies that had already spent a decade struggling to recover from the last financial crisis.

Scholz added that the way voting works at EU level should be reformed to make reaching decisions easier.

"The EU must be able to act collectively," he said. "For that we need to have qualified majority voting in foreign and budgetary policy, rather than enforced unanimity."

In European Council votes, a "qualified majority" is reached with 55% of countries, which must include member states representing 65% of the bloc's 450-million-strong population.