How the Coronavirus Forced the EU to Face a Fundamental Reckoning
Summary: The EU has muddled along for years despite a problematic mismatch between its central powers and those of individual member countries. Now, a multi-billion-euro recovery fund has forced the bloc to grasp the nettle.
The EU's initial response to the coronavirus pandemic was feeble: EU institutions watched from the sidelines as member states erected barriers and curtailed medical exports, undermining European unity and solidarity. Economic crisis quickly followed, further deepening the EU's plight.
Yet this crisis does not need to spell the end or even the weakening of the EU. It may, in fact, usher in a stronger EU. To restore the economies of the hardest-hit member states, European leaders agreed this week to establish an unprecedented 750 billion euro recovery fund. The fund entails issuing mutual debt, meaning that the EU will borrow the funds from the financial markets and hand those funds out to individual member states in the form of grants and loans. The debt will be paid back from the common EU budget and through a new tax the commission is authorized to collect, making this joint recovery effort a controversial step toward fiscal integration. This ignited well-rehearsed battles among member states over fiscal solidarity and sovereignty yet, ultimately, heralded a landmark compromise that marks a major victory for European unity.
An Unclear Hierarchy of Powers
The recovery fund is designed to revive European economies. But its political significance extends beyond the current crisis: it represents a critical step toward addressing a grave misalignment in the construction of the EU's foundations. Europe thrives when either Brussels or national capitals are in charge. But when their respective powers collide and there is no clear chain of command, neither the EU nor its member states are capable of resolving the crises. It is this gray area of overlapping powers that has left Europe so vulnerable in this and all other crises that the EU has faced over the last decade.
Anu Bradford is a nonresident scholar in the Europe Program at the Carnegie Endowment for International Peace.
Why has the EU's response to the public health crisis been so ineffective? Public health policy remains a prerogative of EU member states. There is no common EU public health policy, joint funding, or procurement of medical supplies. At the same time, the free movement of people across the single market—a fundamental EU-level policy—helped the virus quickly spread from Italy across the EU.
The eurozone crisis stemmed from this same misalignment. Monetary policy decisions about money supply and interest rates are an EU matter, but fiscal policy decisions on how to tax and spend remain the domain of individual member states. This was an unsustainable combination from the beginning. Optimists hoped that a common fiscal policy and closer political union would follow once the economic fundamentals across member states had aligned. Those predictions, however, turned out to be false, making it exceedingly difficult to respond to the near collapse of the eurozone.
The migration crisis has been similarly impacted by the collision of the EU's and member states' respective powers. Member states are in charge of their own policies for immigration from non-EU nations. But migrants who manage to enter Greece or Italy are able to move on to Germany or Denmark in the absence of internal border controls within the EU. It is almost impossible to track and manage the flow of migrants in the EU while adhering to the EU's free movement rules.
The Coronavirus Aggravates Existing Crises
Today, these three challenges are feeding off each other. The pandemic is not just an unprecedented public health crisis. The prolonged lockdown set off an acute and severe economic crisis. The migration crisis is likely to re-emerge next on the EU's crises-ridden agenda, as more migrants may leave their ravaged economies to make the perilous trip to Europe. The combined effect of all these challenges will keep the EU in crisis mode for years to come. Yet the recovery fund gives hope that the battle-tested EU will be able to overcome its divisions and act in unison, at least when the costs of failure are too high to bear.
The present and other recent crises have laid bare the EU's weaknesses in instances where the union's and its member states' powers collide. In contrast, Europe is thriving in policy areas where the powers of the EU and its member states are not in conflict. The EU has become a formidable power in trade, with an impressive network of bilateral and regional trade agreements. It is also the world's leading regulator, shaping the global marketplace through the "Brussels effect," which harnesses multinational companies to match EU standards in competition, data privacy, environmental protections, and other areas. Similarly, member states effectively oversee their own national policies related to culture, tourism, education, and sports.
Should the EU Have More Power or Less?
An obvious solution to this misalignment of powers would be a realignment either toward decisively more or less European integration. Both options present challenges. The pursuit of more European integration requires uniform political backing. The lack of such backing paved the way for Brexit and has fueled the rise of populist anti-EU parties across many member states. Yet undoing integration is no small feat either. The UK is finding it difficult to reclaim sovereignty due to the deep interconnectedness of its economy with that of the EU. Undoing common monetary policy is also risky and re-erecting national borders proves costly.
A realignment toward more Europe therefore seems like a more viable solution. Nation states alone cannot fight a global pandemic, manage migration flows, mitigate climate change, and respond to global financial crises. In the past, more Europe has also been the EU's preferred response. Following the eurozone crisis, member states ceded more sovereignty to strengthen the foundations of the common currency. Migration crises have similarly led to an expanded role for Frontex, also known as the European Border and Coast Guard Agency, and to an agreement on more burden-sharing on the allocation of migrants.
The EU's Make-or-Break Moment
The monumental agreement on the recovery fund further suggests that the misalignment can be resolved in favor of more European integration. The fund falls short of a fiscal union, but it is a step to that direction. Despite deep disagreements, member states ultimately concluded that a more integrated Europe is needed to prevent the economic collapse of the most vulnerable member states and to preserve the integrity of the eurozone. Further fiscal integration is not inevitable, but it is now conceivable. By introducing an EU tax on plastics as a mechanism to raise the EU's own resources, the recovery fund planted the seeds of common taxation. More integration on public health may follow. The member states are likely to determine that keeping Europeans safe from future pandemics will require more European cooperation in diagnosis, testing, the procurement of medical supplies, and research on developing a vaccine.
If anything, the EU's multiple crises have shown that partially built houses do not weather storms well. Yet up until now, the EU had chosen to avoid resolving the existing misalignments in favor of Europe or the member states. The deal on the recovery fund sends a signal that a rethink of the EU's constitutional foundations toward more Europe is possible—even if only from the brink of the abyss.
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