The spread of Covid-19 has created an unprecedented global situation, with more than 1.9 million confirmed cases and a death toll nearing 119,000. And with Europe as an epicentre of the pandemic, two of its leading economies – Italy and Spain – have been hit particularly hard with frightening levels of infection and a tragic loss of life.
As of April 13, Italy is facing 20,465 deaths and 159,516 infected patients, numbers that make it one of the largest outbreaks anywhere in the world, second only to the U.S. And Spain is on a similar trajectory, with 169,628 cases and more than 17,600 dead. France has been affected to lesser but still worrying degrees, as has every country in the European Union. Countries across the bloc have closed or limited their open borders, as governments attempt to manage the virus through strict social lockdowns and quarantines.
With several of the EU’s largest economies facing uncharted economic hardships, familiar ruptures have appeared between northern and Southern European nations. And what some consider to be a glacial response to the disaster from Brussels has led to outcries from Madrid and Rome in particular. The union’s fiscal response plans to assist economies in withstanding and recovering from the Covid-19 storm have also reopened old wounds, with the memory of the financial crisis – a decade ago – still fresh.
European Recovery Bonds
It has been a baptism of fire for European Commission President Ursula von der Leyen and Council President Charles Michel, with the former bearing the brunt of the ire directed toward the EU. On April 3, Italian Prime Minister Giuseppe Conte wrote an open letter to La Repubblica in response to one penned by von der Leyen, published in the same newspaper a day earlier, where the president promised more aid to Italy. Conte rebuked the EU’s reaction to the crisis, saying “I hear ideas (from you) not worthy of Europe. The decisions we make today will be remembered for years.”
The Italian premier has also criticised von der Leyen’s support for northern EU nations like Germany and the Netherlands, who remain opposed to the proposed European Recovery Bonds. These ‘corona bonds’, through the issuance of billions of euros, would allow countries such as Spain and Italy to borrow at a far cheaper rate in order to help rebuild their shattered economic structures.
Conte, and his Spanish counterpart President Pedro Sanchez, have asked for the full firepower of the union turned on the Covid-19 crisis. “When fighting a war, you must do everything possible to win and equip yourself with all the tools needed for the reconstruction,” Conte said, adding that these tools included the European Recovery Bonds, but noting that this is not intended to share past debt that each country has inherited.
Yet, some northern economies have argued that the pooling of risk could jeopardise the eurozone and raise their own costs of borrowing making it highly unlikely the proposal will come to fruition. The Dutch have been particularly strident in their opposition.
An Existential Threat
Spain’s President Pedro Sanchez has branded the crisis facing the European Union as not just fiscal or political, but existential. Writing in an editorial that was published in newspapers across Europe, the Spanish leader said the continent was enduring its darkest days since the end of World War II.
Emphasising that solidarity between Member States was a key principle of the union, Sanchez wrote “Europe must build a wartime economy and promote European resistance, reconstruction and recovery. It must start doing so as soon as possible with measures to support the public debt that many states, including Spain, are taking on. And it must continue to do so when the health emergency is over, to rebuild the continent’s economies by mobilising significant resources through a plan we are calling the new Marshall plan and which will require the backing of all of the EU’s common institutions.”
Sanchez added that Europe was “born out of the ashes of destruction and conflict. It learned the lessons of history and understood something very simple: if we don’t all win, in the end, we all lose”. German Chancellor Angela Merkel, whose country is another wounded victim of Covid-19, has seemingly acquiesced in recent days to the severity of the situation, acknowledging that the current situation is the biggest challenge the EU, as a whole, has faced since its foundation.
France, currently Europe’s most powerful economy, has also backed the ‘coronabonds’ plan, with its finance minister, Bruno Le Maire saying that the proposed plan should not get bogged down in rhetoric, but be viewed in terms of what it can deliver on a practical level. “We should not be obsessed by the word ‘coronabonds’ or eurobonds. We should be obsessed by the necessity of having a very strong instrument to provide us with economic recovery after the crisis”, Le Maire said.
Though the European finance ministers agreed last week to make a 540 billion euro emergency fund immediately available, a stimulus package and a decision on eurobonds are still being awaited. With an estimated 1 trillion euros projected to be slashed from the EU’s GDP this year, some nations are concerned that aid is unlikely to be deployed as rapidly and as sufficiently as those most in need would like.
And while it seems the proposed ‘corona bond’ is no longer on the table, a time-limited recovery fund may still come to fruition.
However critical the current situation is, it is not the first crisis the EU has faced. Despite its many disparate parts, the union has a resilient central core of nations who subscribe to its centrist, liberal doctrine. Brexit, the Trump administration, and Russia have all sought to fracture the EU’s cohesiveness in recent years, but the union remains a remarkably resolute jigsaw puzzle.
Visiting Fellow Olivier Remy-Bel at the Atlantic Council, who has also worked in the French Ministry of Defence, appealed in an op-ed for Euronews that the EU be seen for what it is and what it can be, rather than always being criticised for what it is not.
“If I have just one plea, it is the following: let’s see the EU for what it is. A unique political project, successful in bringing peace and prosperity to Europe, incomplete, notably in terms of fiscal solidarity or geopolitical clout, fragile and to be defended, but also able to adapt and muddle through. Benevolent scepticism may yet be our best asset to see through the geopolitical implications of the Covid-19 pandemic”, Remy-Bel wrote.