This op-ed is written by Prof. Dr. Karl-Heinz Paqué, Chairman of the Friedrich Naumann Foundation for Freedom

Something unusual happened in Europe last week. After tough negotiations, eurozone finance ministers agreed on a Corona aid package amounting to 500 billion euros. That is 3.6% of the European Union’s total gross domestic product, no doubt a lot of money. The funds will be financed through the EU’s short-time work programme, the European Investment Bank and the European Stability Mechanism (ESM). Italy has agreed to this package. The ESM funds alone allow for 39 billion euros in extremely long-term loans for the renewal of Italy’s health care system. The interest rates for debtors are among the lowest in Europe – not least because the ESM is supported by all Eurozone members, some of which have the best credit rating, which reflects on the ESM.

In face of the humanitarian catastrophe in Italy, there are practically no conditions for the loans – except for the requirement to use the funds for the health care system, where the crisis has revealed huge deficits and a lack of long overdue investments. Anyone familiar with public finances knows that such earmarking also brings relief in other ways, because self-financed expenditure for the grant purpose can, in turn, be used elsewhere. There is, moreover, agreement that there will be a second aid package – a more economically oriented one, probably on an even larger scale.

Read the full article here.