Brussels: European Union chief Ursula von der Leyen on Wednesday proposed a 750-billion-euro post-virus recovery fund for Europe and urged sceptical member states to back it.
The global coronavirus outbreak has already thrust the EU into its deepest ever recession, and Von der Leyen´s proposal would help the worst affected countries.
If passed, the proposal would be the biggest EU stimulus package in history and could see Europe-wide taxes on plastics, carbon emissions and big tech -- a major power boost for Brussels.
"This is Europe´s moment," Von der Leyen told a session of the European Parliament as she announced the plan.
"We either all go it alone; leaving countries, regions and people behind .. or we walk that road together," she said.
"Let us put aside the old prejudices," she urged.
The virus has killed more than 173,000 people in Europe and put its economy in a deep freeze, with businesses only slowly reopening and tight controls on borders still stifling travel and trade.
Officially called "EU Next Generation", the plan comes following pressure from Italy and Spain, Europe´s first victims of the outbreak that are too burdened with debts to rebuild their economies alone.
If member states accept the deal as drafted, Italy would receive 81.8 billion euros in direct aid over the next few years, and 77.3 billion euros would go to Spain.
"Just to put this into context, this means additional EU expenditure in Italy worth roughly 5 percent of GDP," tweeted Lucas Guttenberg of the Delors Institute in Berlin.
"We can safely say that the EU graduates to a small-but-serious macro player today," he said.
In all the EU would offer grants of 405 billion euros.
In addition, the countries would get loans, with Italy receiving credits for up to 90 billion euros and Spain 31 billion.
The commission made its landmark proposal just days after German Chancellor Angela Merkel endorsed a plan to allow the EU´s executive to borrow 500 billion euros ($550 billion) on markets to fund it.
Merkel, the EU´s most influential leader, also said that the aid could come through direct grants rather than loans, another policy U-turn by Berlin.
The commission now faces a counter-proposal from the so-called Frugal Four -- the Netherlands, Denmark, Sweden and Austria -- who have traditionally opposed using the EU budget to redistribute funds to the indebted south. They have insisted on a loans-only rescue, accusing southern Europeans of living beyond their means and piling on debt instead of choosing cost-cutting reform.
The fund will be linked to the EU´s long term budget for 2021 to 2027 and both must be adopted unanimously by the 27 member states and ratified by MEPs.
"The positions are far apart ... so negotiations will take time," a Dutch diplomat said. "It´s difficult to imagine this proposal will be the end state of those negotiations," the source added.
Von der Leyen will devote the next weeks and months to tough negotiations along with the EU Council head Charles Michel, who chairs EU summits.