Here we go again. The EU and the Covid-19 crisis.
by Tanja A. Börzel & Thomas Risse
№ 3/2020 from Apr 07, 2020
Given the structure of the European Union, the bloc as a whole and its member states have performed much better than during the migration crisis.
After the Eurozone, migration and the Brexit crisis, the EU faces again a crisis of unknown proportions: the coronavirus pandemic.
And guess what?
Member states instinctively reverted to national positions. And surprise, surprise. The EU is blamed for its failure to prevent the unfolding of the crisis and mitigate the hardship inflicted on people inside and outside its borders. The EU’s failure in crisis prevention and crisis management is related to the contestations of the liberal script.
But is this really the case?
While EU experts argue that this is the time to create a United States of Europe to save the EU as a liberal integration project, there's another way of looking at how the bloc has reacted. Putting aside political hopes and aspirations, this is about assessing EU action with its ability and capabilities to act.
First, consider what is taking place on the ground – which some would argue is precipitating the breakup of the union.
Borders have been closed. The free movement of people which lies at the heart of the European integration project has been stopped. Until recently, member states refused to distribute sanitary equipment to their neighbours. And there is continuing bickering over issuing corona bonds. There's also the refusal to relocate over 40,000 migrants and refugees stuck in Greek camps in inhumane conditions. Finally, the EU still has not stopped Hungary and Poland from (ab)using the crisis to further slide back on democracy. So much for European solidarity.
And yet the coronavirus pandemic is pushing the EU along.
Here are a few examples.
- The European Central Bank (ECB) has launched a Pandemic Emergency Purchase Programme (PEPP) that shall supply potentially unlimited liquidity to the Eurozone. It also temporarily loosened bank supervisory regulations to prevent a credit crunch.
- The European Commission established a €37 billion Corona Response Investment Initiative, financed by unused money in the Structural Funds, to support healthcare systems, small businesses, and short-term employment schemes.
- The European Stability Mechanism (ESM) with its unused €410 billion shall provide credit lines at low interest rates to member state governments.
- The European Commission has proposed an EU unemployment reinsurance mechanism (SURE) disbursing €100 billion in financial assistance to secure jobs during the coronavirus crisis.
- The European Investment Bank (EIB) put together an immediate support package of €40 billion available to European companies. It also created a Pan-European Guarantee Fund comprising €25 billion in guarantees from EU member states, to be used to scale up its support for companies by another €200 billion.
- The European Commission has relaxed rules for state aid, and, together with the Council, suspended the Stability and Growth Pact to allow the necessary increase in public spending by the member states.
- The EU has waived customs duties and value added tax (VAT) on imported medical devices and protective equipment. After some member states had blocked exports of medical equipment, the European Commission launched four joint public procurements. It issued guidelines to increase production of medical equipment by European manufacturers. It is building a strategic stockpile of medical equipment (rescEU) and dispatched new control material for laboratories to ensure the functioning of test kits.
- Through its Horizon 2020 Research Programme, the EU supports the German biopharmaceutical company that might be the first to develop a vaccine with €80 million.
- In response to internal border closures of the member states, the Commission released guidelines for border management to guarantee access for emergency service vehicles and vital equipment and to facilitate the movement of goods (green lanes). At the same time, the EU has closed its external borders to non-essential travel. It assists the member states in returning EU citizens.
- Finally, the Commission is currently considering measures to counter malpractices in e-commerce, to speed-up the construction of the 5G data networks, and to regulate the use of telecommunication data in fighting the pandemic to protect citizen rights.
Taken together, the EU and its member states are mobilizing more than €2.7 trillion for 513 million Europeans (compared to U.S. expenditures of €1.8 trillion for 327 million US citizens).
True, the EU’s share pales compared to the billions of Euros its member states have mobilized in fiscal and guarantee measures, which will amount to 2.3% of GDP, on average, in 2020.
Yet all in all, these policy and regulatory responses to mitigate the pandemic are about limiting economic damage, preserving financial stability and preparing for economic recovery
Needless to say, many have argued that this is too little too late.
But don't forget that the EU's political system is characterized by a multi-level governance structure with shared competencies between the EU institutions and its member states. Decision-making processes are cumbersome and slow. It is also a regulatory state with limited budgetary powers.
So when it comes to public health and civil protection, the EU has no regulatory powers. Yet, despite the EU’s weak regulatory as well as spending capacities, its institutions have taken wide-ranging measures, including fiscal transfers and the further mutualization of national debts. Except for the (rather old) disagreement on Euro or corona bonds, these measures have met with little contestation.
It is also remarkable how quickly contestations by nationalist and populist forces have been silenced by an overwhelming response of transnational solidarity during the pandemic. There are exceptions such as Hungary, where Prime Minister Viktor Orban rules by degree and has suspended parliament. And in Poland where the governing Law and Justice plan to hold parliamentary elections in May even though the country is in lockdown.
Yet when it comes to drawing up a balance sheet, the EU is showing resilience. Maybe this is not the time for dystopian scenarios or utopian postulations.