A plan of action

Lucas Guttenberg, Christian Odendahl and Sebastian Grund have devised a plan for a Pandemic Solidarity Instrument that aims to avoid the obvious political pitfalls of debt mutualisation but still provide a €440bn bazooka for the EU to spend on the healthcare systems and labour markets the need it the most. They think the commission should use its power to issue bonds — backed by member state guarantees — in a way that does not add to countries’ debt burdens. The design and the accompanying legal analysis of how to treat the loans is worth your time (VoxEU): 

“The Pandemic Solidarity Instrument would provide more vulnerable member states with enough fiscal relief to act as forcefully as the strong. Action cannot be left to a “second phase” of crisis-fighting — member states need that certainty today that they will have the necessary fiscal space in a few months’ time. The proposal does not create a ‘transfer union’ feared by some in Germany, the Netherlands and elsewhere, nor open-ended debt mutualisation. It is sizeable but proportionate, since COVID-19 could result in an existential crisis for the European project.”