© 2018 SCER
How is the European Union faring in the time of Covid-19 and where might it be heading? It’s easier to analyse the present than foretell the future. But there are already plenty of EU horoscopes out there: the EU may fall apart; it will bounce back stronger than ever including at global level; it will be weakened economically for years to come; or it won’t really change much at all.
With the corona virus still spreading in Europe and nations big and small, including Italy, Spain, France and the UK (still in its Brexit transition) all facing the most difficult of weeks and months ahead, we don’t know where this crisis will take us. But policy choices already taken, and made now and in the months ahead will prove vital.
EU Stepping Up
The EU has faced criticism for a slow start in response to the crisis. Health may principally be a member state responsibility but the EU has important tools at its disposal – ones that it is now starting to use.
Closing borders or limiting travel does not sit well within the EU’s single market but limiting travel while facilitating the vital flow of goods and essential workers is an important measure to tackle the virus. Brussels has stepped in to agree closure of external borders to non-essential travel while pushing for goods to keep flowing internally (to some but not complete success).
Commission president Ursula von der Leyen has established a coordination team of herself and eight key European Commissioners. Fiscal debt and deficit limits have been relaxed, a €37 billion investment initiative will provide liquidity to small businesses and the health care sector, and a joint procurement initiative for medical supplies (that the UK extraordinarily chose not to take part in) is under way.
The European Central Bank also, after a weak start that upset the markets, stepped up with its €750 billion bond-buying programme. And more examples of pan-European solidarity are starting to show – with delivery of medical equipment to Italy, and Germany one of the states taking some patients from Italy and France. Some of this was tardy indeed – with China sending medical staff and supplies to Italy ahead of the EU. But the picture is now changing.
But Key Economic and Political Challenges Face the EU
But there are, too, key challenges that the EU is not yet tackling well or urgently enough. The inconclusive EU leaders’ summit, a week ago, high-lighted deep divides between Italy, Spain, France and others who want a strong common economic response including ‘corona bonds’, on the one hand, and the austerity/neo-liberal countries including Germany, the Netherlands and Austria.
How high debt and deficit levels go during this crisis is yet to be seen. But countries like Italy want support – and not a prospective future similar to the treatment of Greece in the euro crisis. What we see, with the EU leaders kicking the problem back to their finance ministers for a couple of weeks, is that the fundamental problem at the heart of the last euro crisis has not been resolved. And now the eurozone faces a new crisis.
This, for now, is the most fundamental challenge. But Hungary has ensured the political agenda is not light. With prime minister Viktor Orban passing legislation allowing him to rule by decree, effectively suspending parliament with no time limit, the EU’s serious challenge to the rule of law and democracy already posed by Hungary and Poland – and inadequately responded to by the EU – has now got much sharper; Hungary’s measures look almost like a coup.
This surely cannot be shuffled to the sidelines with the excuse of the Covid-19 crisis. A Commission spokesman has labelled emergency measures with no time limit unacceptable and a Commission meeting on 1st April is due to discuss emergency measures further. Action is needed. The EU cannot afford to be found wanting on democracy or on economics at this time.
Looking Forward: EU Must Get This Crisis Right
Where will the EU be in six months time? No one knows. Member states have reacted in different ways to the corona crisis – and whose measures proved better will be analysed contemporaneously and afterwards. Germany, for now, with its mass testing, looks like a more positive model. But this is a global and European crisis not just one for individual and isolated states to tackle.
The EU will only come through the crisis reasonably well if its solidarity (so weak in many ways over the last decade and more) revives. Many of the relevant powers rest at member state level – both health and economic – and diversity and differentiation is not necessarily a bad thing. The EU allows for differentiated integration and subsidiarity/decentralisation after all. But joint actions, and the right actions at the right time, are going to be vital. The EU leaders and the Commission and Parliament must get strategy as well as tactics right and quickly.
And this is a global crisis too. The EU’s ‘fortress Europe’ response to the refugee challenge since 2015 has shown it up as neither rising to that challenge nor sticking to its values. The state of the refugee camps on Greece’s islands were desperate and beyond shocking even before the Covid-19 crisis and without urgent action will become centres of the virus. But in the face of populism, the EU leaders have pulled up the drawbridge. Such weak and reactive leadership is now what the EU needs now.
The EU is the largest global development donor (including EU and global funds) – and it must step up with rapid assistance to developing countries’ health and economic needs. It needs to rapidly develop a strong global strategy in the corona crisis context. But helping with assistance from afar must not take the spotlight off the urgent needs of refugees already in the EU.
The European Commission is already drawing up plans for the recovery from the Covid-19 crisis. This is vital work – such plans will have to be revised and redone as the crisis develops but looking ahead and preparedness, however uncertain, is surely part of the needed response.
The European Green Deal was meant to be the signature tune of this Commission. And climate change has not gone away as the core global challenge. Many have already commented on the reduction in pollution from the lockdowns around the world. But the real questions are how to ensure recovery, and support for recovery, is part of a serious emissions-reduction and green economic development strategy, rather than a return to business-as-usual. That is easier said than done and needs detailed sectoral consideration now.
Brexit is an Also-Ran
Where is Brexit in all this? Pretty clearly it is not an EU priority at the moment. The wisest move from the UK would be to extend transition for two years (allowed for in the withdrawal agreement) and find ways to liaise with the EU on European and global responses to the crisis. This has not, however, been the response of the UK government so far. Time will tell whether Johnson will have to recant on not extending transition – as negotiations stutter due to lack of time and political attention and as the economic crash unfolds.
But for sure this is not an EU priority and will not be again soon. Brexit is an also ran. It’s the UK’s big challenge in recovery whether to impose the double economic shock of Covid-19 and a hard Brexit, whether of the basic free trade deal or no deal variety. But it’s not the EU’s main problem.
Will the EU Rise to the Challenge?
The EU’s priority agenda is the economic, health and solidarity challenges arising from the crisis – promoting assistance and solidarity, protecting the single market, resolving its euro stand-off, dealing with Hungary’s authoritarian regime, putting climate and cohesion at the centre of recovery. This will test the EU more than the euro crisis did.
The EU has often thrived in crises – but the euro crisis found it wanting as did the migration crisis. The EU cannot afford to get this one wrong.