The past two months have been hard for Europe. As Covid-19 rages throughout the continent, Brussels has struggled to find a unified response to the pandemic and subsequent economic crash resulting from the necessary mass closures. The eurozone’s GDP is expected to contract by 10 per cent or more this year, in a drop not seen since the Great Depression.
EU Commission President Ursula von der Leyen has asked member nations to coordinate on coronavirus exit plans in an effort to ease the economic pain stemming from the lockdowns that were needed to curb the virus’ spread. In a 14-page document unveiled earlier this month, von der Leyen noted the importance of a synchronized effort, saying that “Insufficient coordination in the lifting of restrictions poses the risk of creating negative effects for all Member States and most likely increases tensions between them”.
EU officials believe Member States should inform each other of the measures they are opting to take in a bid for the union to come out of the lockdown in a systematic fashion, as opposed to how states acted in an ad-hoc manner upon the onset of the pandemic – imposing travel restrictions, closing national borders, and implementing national policies without consulting or otherwise informing each other beforehand.
Von der Leyen has admitted that that there is no one-size-fits-all solution to addressing the pandemic, which makes coordination a tricky business in the best of times. Furthermore, lifting restrictions will almost certainly contribute to a resurgence in coronavirus infections – unavoidable until a vaccine is developed and widely distributed.
Lack of initial coordination was part and parcel of an absence of overall EU solidarity towards Member States, especially Italy. The country, which has recorded the highest number of coronavirus deaths in the EU, failed to receive support from Europe upon its request for medical supplies during the initial swell of the health crisis. Recognising this botch, the European Parliament offered an apology to Italy in the opening remarks for a coronavirus response planning session in mid-April. Von der Leyen said that while “It is true that no one was really ready for this. It is also true that too many were not there on time when Italy needed a helping hand at the very beginning. And it is right that Europe apologizes wholeheartedly for this“.
Determined to make a better go of it going forward, the EU’s president added that after a bad start, the union has shown it is capable of solidarity. “The truth is that it did not take long before everyone realized that we must protect each other to protect ourselves…The real Europe is standing up, the one that is there for each other when it is needed the most…The one where paramedics from Poland and doctors from Romania save lives in Italy. Where ventilators from Germany provide a lifeline in Spain.”
Italy’s Foreign Minister Luigi Di Maio welcomed the remarks, calling them “an important act of truth”. In a Facebook post, the minister wrote that von der Leyen’s statement was “good for Europe and for our community“.
“Now the European Union has the courage to defend and protect all peoples”, Di Maio wrote, adding that in “defending Italy we also defend the integrity of the EU”.
Reviving the Economy
Von der Leyen’s document appeals to all Member States to gradually reactivate the market and ease travel restrictions in a coordinated manner, while leaving each nation sovereign and supreme with regard to managing public health. Meanwhile, the Commission is working on a European “Marshall Plan” to stimulate the bloc’s economy post-pandemic, an effort set to require billions of euros in funding.
A plan unveiled earlier this month before a video-conference of the bloc’s 27 government chiefs included a 540 billion euros aid package, with plans to strengthen the “strategic autonomy” of European industry and “invest in strategic value chains and to reduce over-dependency on third countries”. The roadmap specifically mentions reducing reliance on foreign suppliers, as well as boosting the union’s digital economy and making it “green” by slashing carbon emissions.
A recovery fund for as much as 1 trillion euros is also part of the initiative, though the specifics in terms of size and funding have not been detailed. On Thursday of last week EU leaders agreed to place the package in the hands of the European Commission as part of the overall budget. “I propose that we task the Commission to analyse the exact needs and come up with a proposal that is commensurate with the challenge we are facing”, European Council President Charles Michel said in an adjoining letter. “The Commission proposal should clarify the link with the [EU budget], which will in any event be at the heart of the EU’s contribution to recovery and will need to be adjusted to deal with the current crisis and its aftermath”, he added.
But pulling together is proving to be easier said than done. Earlier this month, Mauro Ferrari resigned as president of the 2.2 billion euro European Research Council (ERC) – the union’s foremost funder of basic research – after only 3 months, revealing a rift over an approach to research on the coronavirus. On April 7, the day he stepped down as ERC president and chair of its Scientific Council, Ferrari released a statement to the Financial Times saying he had “lost faith in the system” and was upset by the ERC’s unwillingness to follow his lead in setting up a special programme to address the pandemic. In response, the council hit back with a statement of their own, saying that Ferrari had “displayed a complete lack of appreciation for the raison d’être of the ERC”. They also suggested that Ferrari had neglected his duties to attend to personal projects based in the United States, and that there had been a unanimous call for his resignation on March 27. The fracture revealed that much work needs to be done within European agencies to get things working smoothly across the eurozone.
Another point of contention is the use of tech to log contact tracing. A recently published guideline from the European Commission details a toolbox for member states to use, including smartphone apps to digitally trace a user’s steps, which would allow for data gathering tools to aid in tracking – and limiting – the spread of the virus. However, such apps raise serious privacy concerns.
Thierry Breton, the EU Commissioner for Internal Market, said in a statement that “Contact tracing apps to limit the spread of coronavirus can be useful, especially as part of Member States’ exit strategies. However, strong privacy safeguards are a pre-requisite for the uptake of these apps, and therefore their usefulness. While we should be innovative and make the best use of technology in fighting the pandemic, we will not compromise on our values and privacy requirements”.
What About Brexit?
The UK might have exited the EU, but Brexit is far from over. Initially, Prime Minister Boris Johnson wanted to conclude post-Brexit trade talks this year, with the UK set to exit the transitional phase in December. And yet, due to the coronavirus pandemic, that timeline now seems very unlikely. And the risk of economic disruption thanks to Brexit is also more likely than ever.
“The pandemic has completely taken over the agenda in both the EU and in London and relegated the Brexit talks to a secondary issue”, Constantine Fraser, European political analyst at research firm TS Lombard, told CNBC late last week. “It was always going to be difficult to reach an agreement in the limited time available this year. The pandemic means it will now be impossible.”
While requesting an extension to the transition seems the obvious choice, UK negotiator David Frost says that they had no intention of doing so. A government spokesman also echoed the sentiment, saying that London will not ask for a delay. The UK can only request a one-time extension of the transitional period for one or two years, provided it makes the request before this July. Even if all parties manage to hammer out a deal on time, the realities of the pandemic mean implementation will be tricky. If the UK crashes out of the eurozone economy, both the EU and the UK can expect disrupted supply lines and a second economic shock during what looks to be a very difficult recovery period.
Despite all this, a delay does seem likely. Anna Rosenberg, head of Europe and UK at the political risk advisory Signum Global, said the coronavirus crisis had increased the odds of such a scenario up to 60 per cent from the previous estimation of 20 per cent. “The UK will however find a way to save face, most likely refusing to ask for it outright and/or encouraging the EU to grant that extension in their own right. You could also very likely see a last-minute extension, in December, not in June, presented as a ‘phase 2 negotiation’ rather than an extension”, Rosenberg said.
However, the country’s delayed exit would mean that the UK would be on the hook for paying into the EU-wide coronavirus response, a scenario that London hopes to avoid. “It is not in the UK’s interest to extend”, said Frost in a tweet.