Macron delays eurobond debate amid frugal pushback

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Facing resistance from the frugal North, French President Emmanuel Macron on Friday kicked the EU debate over issuing more eurobonds down the road.

The decision reflected in large part the more urgent focus of EU leaders attending an informal summit at Versailles: How to reduce Europe’s dependence on Russian oil and gas after slamming Moscow with sanctions for invading Ukraine.

That priority left little time and appetite during the two-day summit to discuss the controversial question of issuing more EU debt to fund common strategic policy targets such as boosting defense and fighting climate change, officials briefed on the talks told POLITICO.

EU leaders unveiled a declaration that deplored Moscow’s war against Ukraine. The 10-page document also announced their plans to strengthen the bloc’s defense capabilities, reduce its reliance on foreign energy and develop a more robust economic base.

There’s no mention of joint debt in the declaration, however. The Netherlands and Germany were among a handful of Northern European countries that pushed back on the issue. Their leaders stuck to their view that capitals should use the tools they already have at their disposal, notably the bloc’s €800 billion pandemic recovery fund and the EU long-term budget.

But Macron refused to rule out in his concluding press conference the prospect of future eurobond issuances to finance strategic investments.

“The right strategy, as we’ve seen through the pandemic, is to agree on objectives, and when we do that … then the instruments just follow,” Macron said. “Given that we have divisions and disagreements, if we start by working on the instruments, then generally things don’t move forward and we waste time.”

In the coming weeks and months, the European Commission will calculate how much the EU will need to spend to strengthen its sovereignty within policy areas that include energy, defense, food and industry. That’ll help lay the groundwork for future summits on how best to achieve those spending targets, Macron said.

Macron’s views have strong support from Italy. Prime Minister Mario Draghi is adamant that national budgets have insufficient means to cover the trillions of euros needed to beef up military spending and drastically cut greenhouse emissions within the decade. A compromise will be needed, he told journalists after the leaders’ gathering.

That’s where the EU’s recovery fund can play a role, as far as frugal nations are concerned. No country except Italy has made full use of the loans on offer within the cash pot, which the EU financed with common debt to cushion the pandemic’s impact on the economy.

“One of the things I put forward … is that: Let’s make maximum use of the existing instruments,” said Dutch Prime Minister Mark Rutte, reiterating his opposition to new eurobonds or joint debt issuance. “We could maybe redirect or re-channel and focus more on the issues at hand.”

Giorgio Leali, Jacopo Barigazzi and Nette Nöstlinger contributed reporting.