When the EU is not in crisis mode, its leaders like to talk about big ideas and preach to their 446 million citizens the common values that hold these different nations together as a unique project to bring peace and prosperity. But the outbreak of the coronavirus is the latest in a long series of crises in the European Union that have plunged the EU into existential despair.
First, the 2008 eurozone crisis debunked the myth that rich nations take an economic hit before they help those in need. When a million people arrived at the EU’s borders seeking refuge, governments turned to each other, and there was no shortage of help from the United States, Britain, France, Germany, Italy, and Spain. Now that the virus has spread and embattled member states has been in the midst of their worst crisis since the 2007-08 financial crisis, the Commission — the guardians of the EU rulebook — is approving unprecedented border and economic policies to rescue supply chains and businesses from embattled member states. While the Heads of State or Government have recognised the need to support Italy in particular, they are divided on whether to use the economic instruments at their disposal now or to keep something in reserve in case a second wave of infections should occur. A group of nine nations wants common debt to be borne by eurozone countries, but economists say that, given the exceptional nature of the shock, it is too early for the European Union to take the step of issuing its own common debt. EU countries will have to run huge budget deficits to combat the pandemic and its consequences, and they must be able to borrow at reasonable interest rates. Merkel and other leaders have said the block should tap the 410 billion euros left over from the European Stability Mechanism, the rescue fund set up to help countries in the wake of the financial crisis in Greece, Spain, Italy, and Portugal. This has infuriated southern European countries, which link the ESM to the harsh austerity imposed on eurozone rescue funds for Greece and Italy, as well as Greece itself. It is well documented that this has led to a deep rift between the EU and its southern member states and is nearing disintegration. Other observers say that COVID-19 will have the opposite effect, triggering a crisis of confidence in the European Central Bank (ECB).
There is likely to be an economic slump that could trigger a debt crisis, analysts say. At a time when coordinated action and solidarity should be paramount, the EU’s political, economic and social institutions and its governmental institutions are fragmenting. Since the financial crash of 2008 shook the grip of established parties in European politics, national and continental politics have changed dramatically. In the short term, it seems likely that the euro will rise again once the debt crisis in Greece, Italy, Spain, and other eurozone countries has been resolved. But the eurozone is facing an evolving financial crisis that includes escalating defaults, a lack of confidence in the European Central Bank (ECB), and the media used to buy up bond prices. Germany joined the list of EU countries reintroducing border controls. Brexit is a blow to the European Union’s political bureaucracy. The impact is dramatic, because it effectively ends freedom of movement within the Schengen area, as Germany is in the middle. The worst-hit countries, such as France, Spain, and Italy, have fired angry warning shots at the block’s future, while some of its neighbors are protesting the lack of financial aid. Officials had hoped to open the European Conference in May, but were forced to postpone the planned launch until at least September as the disease continues to spread across the continent. European Union leaders called on the block’s finance ministers to come up with new measures to deal with the devastating economic effects of the coronavirus pandemic if they fail to bridge the gap on how best to share the debt burden. The talks come as the death toll from COVID-19 in Europe has risen to well over 83,000. Leaders called for a plan to revitalise the suffocating EU economy by lifting lockouts and to take other health and preventive measures.