EU's Gentiloni urges Germany to compromise in 'coronabond' feud

The European Union's economics commissioner said Monday that member states would never all agree to blanket mutualised debt, but that a compromise with Germany was crucial to give Europe a credible rescue plan from the coronavirus crisis.

One way to finance the massive effort needed to shore up Europe's economy during the crisis "is to issue bonds, but not generically to mutualise the debt, which will never be accepted," EU Economics Commissioner Paolo Gentiloni told Italy's Radio Capital.

Ongoing disagreements among member states on what policy to take risked splitting and dooming the European project, added Gentiloni, a former prime minister of Italy.

Gentiloni's comments came after Italy and other southern countries lobbied unsuccessfully last week for so-called "coronabonds", money raised jointly by the 19 countries that use the euro single currency.

On Thursday, Germany and other northern EU states rejected the proposal backed by nine countries, including Italy, Spain and France, for such mutualised debt issued in the name of the eurozone as a whole -- a long established red line in Berlin.

Gentiloni said he had expected that reaction by Germany, calling it a "long-standing vision that we know by heart".

Germany has repeatedly dismissed the idea of mutualised European debt as an attempt by over-spending southerners in need of economic reforms to take advantage of the cheap borrowing rates enjoyed by states with balanced budgets.

But Italian Prime Minister Giuseppe Conte on Monday insisted that Italy was not looking to have its mountain of debt shared across the eurozone.

"No one is asking Europe to assume sovereign debt," Conte told Spain's El Pais newspaper.

Conte said something like a coronabond would be specific to the current crisis: "A common European debt instrument that allows us to win this war as fast as possible to revive the economy."