The European Union is currently facing its greatest challenge yet in the form of the Corona pandemic. Its response may determine its future. Will Europe rise to the common challenge and emerge stronger or will it fail to do so and thereby jeopardise the European project? Not only the measures taken but also how the EU agrees on these measures over coming days and weeks will determine its destiny.
The state of play at the beginning of 2020: the EU in relatively good shape
Before speculating about the future, it is useful to step back and assess the situation up to the outbreak of the pandemic. In the second half of last year and at the beginning of this decade it seemed that the EU was on a relatively solid footing for the first time in many years. Granted, low growth and high debt continued to plague many European countries, a new Middle-Eastern refugee crisis was brewing and many important post-crisis European projects such as Capital Markets Union or Banking Union had stalled. But the Great Financial Crisis (GFC) and subsequent eurozone crisis – which had pitched EU members against each other and nearly pulled the eurozone apart – were gradually sliding into the history books, the EU had more or less managed to minimise the fall-out from the trade war between the United States and China, and the tough and often tedious Brexit negotiations had created unity and a common purpose not seen for many years. Public opinion on European matters reflected this, with the Eurobarometer survey showing that six out of ten respondents were very or fairly attached to the EU in the second half of 2019, up from five out of ten in late 2016, and only 4½ out of ten in 2012 and 2013 during the peak of the eurozone crisis.
An external shock of epic proportions: the Corona pandemic opens old wounds
The Corona pandemic is first and foremost a humanitarian crisis but it is also an economic catastrophe and might threaten the EU’s future. On some estimates the economic shock could be larger than that experienced during the GFC, with unemployment soaring and government finances deteriorating rapidly. While the initial policy response in most capitals was entirely driven by domestic events and concerns, the subsequent discussion on the European level quickly revealed the deep divisions still festering between northern and southern European countries. What is the best European policy response to this continental challenge and shock? A decade on, the “north’s” tough – some called it dogmatic – stance during the eurozone crisis has clearly not been forgotten in southern European capitals. Conversely northern politicians seem to remain deeply suspicious of their southern neighbours.
Don’t ignore the process
If there ever was a time to show solidarity, this is it. Anything else could jeopardise the future of the EU. Current European discussions – including during Tuesday’s eurogroup meeting – mainly focus on the policy measures going forward. Coronabonds, potentially unconditional ESM loans, the Commission’s proposed SURE instrument offering up to €100 billion to support European labour markets, all are hotly debated.
What is ignored in all this is that the process – and in particular how it is perceived by the European public – matters too. Even if European policy makers eventually come up with an acceptable and appropriate policy response, it is no guarantee that this will secure the future of the EU. Indeed it may be too late already, perceptions will have already been formed.
Europe in 2025: two illustrative scenarios
Consider two plausible future scenarios for Europe over the coming years. In both scenarios the Corona pandemic evolves similarly in European countries. Eventually social distancing and other measures bear fruit. Some countries are “merely” deeply shocked by the experience, others remain traumatised for years. Unconstrained by the EU’s fiscal rules, national governments announce generous fiscal measures to support the economy and stimulate a recovery. Some countries will find it easier to return to growth than others.
In the first scenario domestic measures are complemented by bold, decisive, big-hearted – perhaps even symbolic – actions on the European level. Politicians rise above domestic policy considerations and see the bigger picture: this is about Europe’s future. Despite the trauma, Europe could emerge stronger and united as a result, with the general public feeling more attached to the idea.
In the second scenario domestic measures are not complemented by bold and decisive actions on the European level. Instead European leaders do what they know best: have endless debates before eventually agreeing on a compromise, which nobody is really happy with. Even if this political compromise comprised the same measures as in the first scenario, the general public would probably be disillusioned. In such a scenario it would be easy to imagine and entirely plausible that populist parties could shore up anti-European sentiments and take their countries out of the EU.
Substance and process matter for public perceptions
Misquoting Lunceford, James and Fitzgerald’s famous jazz song from 1939, it is what you do and the way that you do it that will shape Europe’s future. And the window to influence public sentiment – the bold and decisive policy response required to allow Europe to emerge strengthened rather than weakened – can probably be counted in days or weeks rather than months. Policy makers would be well advised to reflect on this before starting any long meetings.