Merkel Warns EU Faces Biggest Challenge Since Its Foundation

(Bloomberg) -- The European Union is facing the biggest challenge since its foundation, Chancellor Angela Merkel warned as she stressed Germany’s readiness to help revive the continent’s economy once the coronavirus pandemic subsides.

“Everyone has been hit equally by this and it must be in the interest of everyone and of Germany that Europe emerges stronger from this test,” Merkel said in a press briefing before crucial talks over the EU’s crisis response later this week. “The answer can only be: More Europe, a stronger Europe and a well-functioning Europe.”

Merkel’s invoked language she used during the decade-old euro crisis, saying that Germany’s fortunes rested on the wellbeing of the 27-member bloc as a whole. In doing so, the chancellor pushed back on criticism that Germany lacked solidarity in rejecting proposals from southern member states for a jointly issued debt instrument.

Her comments came as Europe enters a decisive week for its response to the virus, which has hit the area harder than any other continent. On Tuesday, the euro area’s finance ministers will discuss proposals to mitigate the economic and financial fallout.

Merkel backed her finance minister, Olaf Scholz, who favors the euro area bailout fund as the primary instrument to offer precautionary credit to member states. She also backed a European Commission proposal for a state-sponsored wage support system, one of the main tools for crisis fighting in Germany.

“This will be about showing that we are prepared to defend our Europe, to strengthen it,” Merkel said.

While EU leaders will likely agree on the use of existing instruments such as the euro area’s bailout fund to help finance the recovery efforts, a group of countries led by France is seeking to push through more radical measures to share the burden of the spending required to rebuild.

Merkel did not say if she is willing to support this specific proposal, but she said Germany was ready to help with the economic reconstruction after the coronacrisis. “We will of course need a revival program, a recovery program,” Merkel said. “Germany is willing to make its contribution.”

EU Commission President Ursula von der Leyen has called for a modern-day Marshall plan for Europe in reference to the recovery program put in place by the U.S. from 1948-1952 to help Western European economies after World War II.

Recovery Signs

Merkel returned to her office on Friday after a 12-day, self-enforced quarantine. At least three tests showed the 65-year-old German chancellor was free of the coronavirus.

Her press conference came as there were tentative signs in Germany that the spread of the deadly disease is slowing. Infections rose by another 4,031 to surpass 100,000 on Monday, according to data from Johns Hopkins University. And the number of new fatalities, at 140, was the lowest in nearly a week.

But as Austria became the first EU country to lay out a plan to return to normal life, Merkel said that while Germany had “moved forward” in efforts to slow the spread of the virus, it was still too early to issue a timeframe for relaxing measures.

Still, her government is studying options to scale back restrictions “day and night,” she added. Germany has put strict social-distancing rules in place more than two weeks ago and the government has recently extended those until April 19.

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