Coronavirus means the EU will never be the same again

22 March 2020

5:51 PM

22 March 2020

5:51 PM

The European project was built on the idea of rendering future war among European states impossible. The EU is programmed to avoid armed conflict among its member states, a situation that would blatantly undermine its very essence. But who could have predicted that an epidemic would shake its foundations. In the space of a couple of weeks fundamental tenets of the EU project have received a body blow and may not recover from the coronavirus epidemic.

The European Stability Pact requires member states to respect a three per cent budget deficit. France was about to breach that anyway and has used Covid-19 as a cover to go much further, as will Italy, Greece and others. The Pact also requires states’ national debt to go no higher than 60 per cent of GDP. Many of the ‘northern’ states have respected that, whereas the ‘southerners’ have not. Italy and France were already at 130 per cent and 100 per cent respectively before the epidemic, but with full lockdowns those figures will soar.  On Friday, the EU bowed to the inevitable and lifted the budget cap, the first time ever. This will inevitably exaggerate the financial mismatch between the EU’s north and south that was such a feature of the 2010/12 euro crisis. Of course, it can forcefully be claimed that the exceptional European pandemic requires exceptional measures. Rightly so. But rolling back that debt when the crisis is over will not be easy without stringent austerity measures as meted out to Greece in 2012/13.

Another of the EU’s fundamental principles is control of state aid. Goodness knows what a shibboleth that has been in the Brexit negotiations. But expect states such as France, which has statism in its DNA, to go to town on re-nationalising swathes of its industry, beginning with Air France. That is fair enough in times of crisis, but getting those states to relinquish control in better times will be arduous.

The Schengen borderless EU has also been dealt a body blow. Frontiers have been restored across Europe by individual member states and the EU – finally and reluctantly – agreed to suspend Schengen only this week. Given that many EU states – notably in central and eastern Europe – have battled with the Commission in wishing to take control of their own borders since the height of the migrant crisis in 2015, expect the return of Schengen to be a struggle for Brussels.

Ironically, freedom of movement, that totem of EU principles, has also ceased, not only between states but within certain states, albeit for sound medical reasons. What has irked many pro-Europeans, and Brussels itself, is that the response to Covid-19 has not been a standard EU-wide procedure. That is because health is not an EU ‘competence’. Thus different states have applied different measures to their populations to control the virus.

In broad terms, there are two models. The Italian model of full lock-down, since adopted by Spain then France and Belgium; the UK model of limited restrictions, but refusing general ‘confinement’, followed also by Holland and Sweden.

France, after initially rejecting the Italian method then enforcing it like a Jacobin Terror, is particularly upset at this lack of European harmony, as I wrote in The Spectator this week. Could a faint historical pattern be emerging in the choice of national method? Those societies that have traditionally emphasised the liberty of their citizens above equality are rejecting confinement. But suffice to say that the EU has been denied control of one of its founding principles.

A further example of the damage to the European project wrought by the epidemic is the break-down of European solidarity. Never a perfect concept in the first place, that solidarity under crisis is patently ceding to nation state reflexes. Italy, the first into the crisis and woefully lacking in surgical masks and ventilators, was pained by France and Germany’s refusal to release some of their stocks.

Finally there is the overarching question of the EU’s brittle financial solidarity, or its absence. In the international financial storm that has shaken markets and economies, the weaker individual European member states have until late this week been left to fend for themselves as Ambrose Evans-Pritchard forcefully pointed out in the Daily Telegraph. Rather than rushing to provide the liquidity and guarantees in the name of monetary union, the European Central Bank dragged its feet, unlike the Federal Reserve or the Bank of England. Worse still, its new president recklessly announced last week at a moment of extreme vulnerability in the bond markets ‘we’re not here to close spreads’, with a detrimental impact on Italian debt. Only, finally, on Thursday did it assume its role as lender-of-last resort for its members. As with the 2008-09 financial crash the parsimonious nations, led by Germany, have been reluctant to bail out the spendthrifts. Now they may be forced into the unthinkable, for Germany at least: debt mutualisation.

What is certain is that some European political parties will be boosted electorally by Europe’s feebleness in the crisis. Both Matteo Salvini in Italy and Marine Le Pen in France excoriated Brussels weeks ago for refusing to lift the Schengen agreements to stop the virus spreading, according to them, out of pure EU ideology. The forced suspension of many of the EU’s fundamental principles is a gift to them. Brussels will struggle to put the genie back in the bottle.

Where all this will leave the European project is a moot point. Debt mutualisation, postponed from 2008/9, is explosive and could make or break the EU. And yet, the history of EU integration is evidence that it thrives on crises as levers for ever-closer union. France’s foreign minister views the epidemic as an opportunity for Europe, failing which she will ‘miss her appointment with history.’ In which case, president Macron’s greater European integration reform programme may actually see the light of day and Europe move to the next level of ever-closer union.

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Prof John Keiger is a specialist in French history and the former Research Director in the Department of Politics and International Studies at the University of Cambridge

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