Merkel And Macron Find New And 'Unnatural Path' To Stave Off Trouble In Europe

The European Union would be allowed to raise joint debt under an unprecedented coronavirus recovery plan considered a political and fiscal no-go zone only two weeks ago. German Chancellor Angela Merkel and French President Emmanuel Macron announced the proposal on Monday in a bid to end divisions over how to help Europe recover from the worst recession in living memory and ease simmering tensions that have stoked doubts about the bloc's effectiveness and its long-term future.

It is the first time the two countries have floated a plan to raise joint debt under the EU name, and it represents a significant weakening of Germany's long-held hawkish fiscal views. Already weighed down by high debt levels, hard-hit southern nations like Italy and Spain have been warning for months that they will struggle to rebuild their shattered economies unless the EU is able to offer more direct assistance and find a way to lower borrowing costs, possibly through a new shared debt instrument known as a 'coronabond'.

Northern countries including Germany have been strongly opposed to the idea, but in a surprise compromise on Monday, Merkel said she would support a new €500 billion ($837 billion) recovery fund that would hand money to Europe's worst-affected regions and industries. Significantly, Merkel and Macron said the European Commission should borrow the €500 billion on the financial markets under the EU name – the first time Germany and France have proposed such an arrangement. Merkel told a joint virtual press conference with Macron that she had settled on an "unnatural path" because of the "unnatural nature" of the emergency. -Full Report

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Angela Merkel and Emmanuel Macron 2019 Sign Germany-France Friendship Treaty 

In January of 2019, German Chancellor Angela Merkel and French President Emmanuel Macron signed a friendship treaty on Tuesday that recalls a historic pact the former enemies agreed to in 1963. The new accord was signed in the ancient western German city of Aachen, exactly 56 years after the Elysee Treaty that is considered a key moment in Franco-German relations.