Europe Poised to Repeat Austerity Mistakes in Coronavirus Response

https://www.nytimes.com/2020/04/08/opinion/europe-coronavirus.html

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The European Union is ill suited for crisis. Its 27 members are happy to feed at the common trough in sunny times, but storms tend to turn them into squabbling rivals. The financial collapse of 2008 and the following refugee crisis are memorable for their bitter recriminations and disunity. It’s all happening again over Covid-19, this time amplified by fear and death on a continent struggling with half of the world’s 1.4 million confirmed cases.

Borders are being thrown back up. Italy and Spain, Europe’s hardest-hit countries, facing economic collapse on a grand scale, accuse the prosperous north of being deaf to their cries for help. The north sees itself once more called on to bail out a profligate south. Hungary sheds a few more vestiges of its democracy. China and Russia, quick to seize on an opportunity to demonstrate the fickleness of democracy, bring in medical supplies that the European Union is purportedly failing to share. This week, the head of the union’s top scientific research body, Mauro Ferrari, quit after just three months on the job in a storm of mutual recriminations.

As in crises past, old enmities surfaced. A group of Italian politicians bought an ad in a German paper to remind the Germans that they were not compelled to pay off their debts after World War II. And once again, a chorus of commentators questioned whether the union can survive.

Part of the problem with this picture, as in the past, is a misunderstanding of what the European Union is and what it is capable of doing. The bloc is an alliance of sovereign countries, not a central government, and Brussels has control only over external trade and competition. For the rest, its executive branch, the European Commission, can only seek cooperation, not order it. The states that share the euro do not have true fiscal union, under which wealthier parts of the bloc would prop up the poorer.

Most notably in the current crisis, public health is left entirely to national governments. That does not make for efficient crisis response.

Within its limitations, the union has managed to do quite a bit. Rules have been loosened to enable national governments to prop up suffering businesses, and limits on government debt have been suspended. The European Central Bank has announced a 750 billion-euro ($800 billion) rescue package. Austria, France and Germany sent protective masks to Italy; Germany, faring better than its neighbors, has taken in patients from Italy and France; the common border has been sealed.

And there are more tools available, most notably the European Stability Mechanism, a bailout fund created after the 2008 financial crisis that has more than 400 billion euros to help countries in crisis.

But Europe could do better. Much better. A virtual meeting of E.U. leaders two weeks ago that was supposed to issue a joint statement showing unity and resolve turned into hours of often rancorous debate on whether to issue a special “coronabond” underwritten by rich and poor countries to share the massive economic damage wreaked by the coronavirus. To the champions of the bond — France, Spain and Italy — this would represent a common European response to an unprecedented crisis. For Germany and the Netherlands, among others in the north, the bond smacked of the fiscal unity they reject, and they argued, with some justice, that the union already has the E.S.M. bailout fund.

In the end, in classic E.U. style, the leaders kicked the problem down the road, tasking finance ministers to come up with some ideas in two weeks’ time. On Monday, they were said to be preparing a “strong package,” but no “coronabond.”

That pace may have been palatable, or at least justifiable, during the Greek economic crisis a decade ago, when fortunes, but not lives, were at stake. It’s cruel for Italians or Spaniards confronted with death and economic catastrophe. They aren’t in a bind due to profligate spending; they’re in the throes of a plague for which they bear no more responsibility than any other E.U. member.

The question is not whether the European Union will survive; it will. The question to ask is what’s the point of any union if it cannot find unity when it is needed most, when what it does, or fails to do, will shape its identity for a long time to come, and possibly its fate.

The question is not only for Europeans. At a time when every instinct drives families, communities and countries to protect themselves and their own, true leadership requires knowing that we’re all in this together and can only conquer it together. The European Union has made a slow start, but it still has a chance, and the means, to live up to its name.

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