The European Commission scrambled over the weekend to contain Italian anger after President Ursula von der Leyen spoke dismissively of a key demand from Rome and other southern capitals for a European response to the economic fallout from the coronavirus crisis.

In an interview published Saturday with German news agency DPA, von der Leyen appeared to reject the idea of a common debt instrument, sometimes called a corona bond — a step called for by Italy and Spain, which have the highest number of deaths from the coronavirus, and seven other EU countries, but so far opposed by Germany and others.

"The word corona bond is really just a slogan," von der Leyen said. "Behind it, though, there is the larger question of guarantees. And there, the concerns in Germany, but also in other countries, are justified."

Von der Leyen also specifically rejected a report by Germany's Der Spiegel magazine that the Commission was considering borrowing billions of euros to support unemployment insurance in member states. The debt issued would be a type of eurobond — the kind of instrument rejected by Germany and others.

"The legal limits are very clear, that is not the plan," von der Leyen said, in an apparent reference to strict rules around how the EU executive can borrow. "We are not working on that."

European Council President Charles Michel brokered a compromise that called for the eurozone finance ministers to develop various options.

Coming just two days after a tele-summit of EU leaders nearly broke down because of a dispute over the bond question, von der Leyen's remarks set off a firestorm in Italy, where Finance Minister Roberto Gualtieri denounced them at a Saturday evening news conference with Prime Minister Giuseppe Conte.

“The words of the EU Commission president are wrong," Gualtieri said. "And I am sorry that she pronounced them."

In a pointed rebuke to von der Leyen, Conte said, “Europe needs to show whether it can live up to this call of history.“

“I will not go into history as the one that didn’t take the responsibility to do what needs to be done for European citizens,“ he declared.

Conte also noted a decision on corona bonds was not for von der Leyen or the Commission itself to make. But headlines in Italian newspapers quickly proclaimed that von der Leyen would block the idea.

"Corona bonds, 'We won't do them, I understand Germany,'" the leading daily Corriere della Sera wrote in summarizing her comments. Il Messaggero spoke of an "ambush" by von der Leyen.

David Sassoli, the president of the European Parliament, who is Italian, demanded an explanation. "I think a clarification must come from President von der Leyen," he told Il Messaggero.

Damage control

The Commission then spun into damage control mode, issuing a rare Saturday night statement shortly after 9 p.m., noting that the EU it still developing its overall response to the economic shock from the pandemic, and that nothing had been ruled out.

The statement, however, also cited limits because the EU is in the final year of its current long-term budget, the Multiannual Financial Framework (MFF).

"The European Council tasked the Eurogroup to come up with proposals within the next weeks," the statement said. "The Commission will participate in these discussions and stands ready to assist, if supported by the Eurogroup. This is required since the fiscal space for new instruments is limited as we are in the last year of the MFF."

The statement noted that the Commission is already trying to speed some emergency money to EU countries, by redirecting unused "structural funds" and it said the Commission would adjust its MFF proposal, which was the subject of difficult negotiations among the bloc's leaders before the pandemic struck.

"At this juncture, the President is not excluding any options within the limits of the treaty," the statement said.

While Italian officials welcomed the clarification, anger over the issue runs deep, with origins in the EU's response to the eurozone debt crisis that began more than a decade ago — in which northern countries, especially Germany and the Netherlands, and the Commission insisted on harsh spending cuts in hard-hit countries as part of their conditions for providing financial aid.

While the countries most affected by that crisis have now staged significant recoveries, palpable bitterness remains.

During the videoconference summit on Thursday, Conte threatened to block the leaders' joint concluding statement because he wanted more explicit support for the concept of a joint debt instrument. He was supported by Spanish Prime Minister Pedro Sánchez.

In the end, European Council President Charles Michel brokered a compromise that called for the eurozone finance ministers to develop various options within 15 days.

One senior EU official described the discussion as "emotional" and several officials and diplomats acknowledged that the fight was rooted in deeper issues of North-South mistrust than just the EU's response to the coronavirus crisis, which has involved unprecedented and far-reaching measures.

The Commission has waived budget limits on EU countries, saying they can borrow and spend whatever is needed to address the emergency, and it has granted waivers to state-aid rules so that capitals can quickly provide assistance to hard-hit industries and companies. The European Central Bank has also announced a giant €750 billion effort to prop up the economy, which has been paralyzed by lockdown measures.

But von der Leyen and her home country of Germany, as well as other northern countries, face a serious trust deficit in southern Europe. Dutch Finance Minister Wopke Hoekstra had already drawn the ire of southern countries, notably Portuguese Prime Minister António Costa, by saying the EU should investigate why some countries were not better prepared to weather the crisis.

Von der Leyen, who served as a minister in the German government for 13 years before her surprise selection as Commission president last spring, is a close ally of Chancellor Angela Merkel.

Merkel made clear after Thursday's video summit that Germany and a number of other countries did not favor a joint debt instrument. Dutch Prime Minister Mark Rutte spoke out strongly against the idea.

The article by the DPA news agency that set off the controversy is the latest of several interviews that von der Leyen has granted to German media during the crisis. In its own English version of the interview, DPA translated von der Leyen's use of the word "Schlagwort" to describe the corona bonds as "a popular word" but it is more usually rendered as "slogan" or "catchphrase" and that's how it was understood in Italy.

Following the Commission's statement, Italian officials appeared to soften their criticism somewhat, including in a tweet by Gualtieri who took note of the clarification, adding: "Now the Commission is really working on all possible options, none excluded. There is no time to lose."

Prendiamo atto del chiarimento fornito dalla Presidente della Commissione europea @vonderleyen rispetto alle parole sbagliate sui #coronabond. Ora la Commissione lavori davvero a tutte le opzioni possibili, nessuna esclusa. Non c'è tempo da perdere. — Roberto Gualtieri (@gualtierieurope) March 28, 2020

Asked the reason for the late Saturday statement, a Commission spokesman said: "It was obvious that a clarification was needed. As simple as that."

Jacopo Barigazzi, Lili Bayer, Giorgio Leali and Bjarke Smith-Meyer contributed reporting.

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