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Ten years ago, Europe faced a continental crisis, and the dominant powers in the European Union insisted that each country deal with its own sovereign debt problems. A few months ago, it appeared that the EU would respond to COVID-19 in the same way, and the pandemic threatened to spur another painful wedge between comfortable Northern Europe and the suffering South.
But in July, the EU reached a landmark agreement and agreed to distribute hundreds of billions of dollars to countries devastated by the effects of the coronavirus pandemic. Most importantly, they will raise money as a group and badly damaged countries like Italy and Spain will not have to pay them all. It came in handy and starts, but $ 750 billion ($ 880 billion) coronavirus recovery package formally named The Next Generation The EU is inspired by cautious optimism that Europe is taking steps towards a more perfect union.
In recent months, we have rediscovered the value of what we have in common, European Commission chief Ursula von der Leyen said in her annual State of the Union address on Wednesday. We showed what is possible when we trust each other and trust our European institutions. In her speech, she announced that 30 percent of the 750 billion will be raised through green connections, which raise money for environmentally sustainable projects. We choose not only to repair and recover for the here and now, but to shape a better way of life for the world of tomorrow, said von der Leyen.
This is certainly a turning point in the history of the European Union, Fabiano Schivardi, an economist at LUISS University in Rome, told Intelligence. There are several reasons EU leaders may have acted differently than in 2010, when the return from the financial crisis forced so much of Southern Europe into years of catastrophic budget cuts and national humiliation, he said. First, there is a growing agreement that forced austerity on the continent simply did not work. Second, the rise of anti-EU populism in Europe in recent years has made clear the dangers of uniting once again as a bloodless, technocratic club. The fact that the UK is going through Brexit may have sharpened minds as well. And third, it became clear that Europeans, including the wealthy and affluent North, saw the virus as an act of God that inspired feelings of genuine solidarity.
Last time, there was this feeling that Southern Europe had to pay for our sins, but in this case, it is difficult to find a moral judgment. It was a shock that just hit some countries worse than others and people around Europe could see horrible images of suffering here, Schivardi said.
Earlier in the year, Germany, the EU’s most powerful country, rejected talks on coronabonds set up by the union to fund a pandemic recovery. But the pandemic strengthened Angela Merkel’s position within Germany and she saw that national polls reflected a shift towards European solidarity, historian Adam Tooze wrote to us External work. At the July summit in Brussels, she and other leaders drafted an agreement through which the European Commission would borrow large sums of money, for the first time, and distribute 390 billion in grants, not loans. Southern European countries, in particular, were happy with the deal.
This agreement is historic because it represents a qualitative step forward in the European project and because it paves the way for a Europe that is fairer, more modern and more sustainable, Javier Moreno, head of the Spanish Socialist Party (PSOE) delegation to the European Parliament , said in a written statement to Intelligencer. The PSOE is currently governing in coalition with the left-wing Podemos, which spawned itself from anti-austerity protests in 2011. You may debate whether or not the response to the coronavirus has been as rapid or as broad as we would have liked, but it is clear that things would have been infinitely worse if it were not for the EU, Moreno wrote. To get this emergency, the answer continues to be clear: more union.
In most of Europe, life has returned to a kind of normalcy, with restaurants open and schools reopened. For continents has seen a sharp increase in cases in august, and even without a second wave, many countries face a long climb back to full health. In addition to a higher number of deaths, countries in Southern Europe face a more severe economic challenge because countries on the Mediterranean coast rely so heavily on tourism.
The mechanism created for Europe’s next-generation debt issued by the European Commission will make it easier for the EU to tackle future crises, analysts say. Instead of risking continental divisions over money problems in the future, they can rely on investors eager to finance an emergency injection. The announcement of the green link came after investors and politicians called for funding to be used to spur a transition to a greener European economy. In addition to the $ 750 billion for the next generation EU, the commission will also raise $ 150 billion to help fund European unemployment schemes.
On the issue of European economic unity, more pro-European countries like Spain, Italy, Greece and Portugal have their reverse in the so-called Four Frugal, a group of nations that oppose giving the EU more money for it. distributed. The Netherlands, Denmark, Sweden and Austria have worked for him say back some money for their rich countries after the July deal. But generally this time, the other side has won the day. For now.
Like almost everything that happens with the EU, the good news is compounded by the challenges ahead, said Rainer Kattel, an Estonian economist at the UCL Institute for Innovation and Public Purpose in London. On the one hand, really positive they got an agreement and it is a good sign that the EU is able to function as an institution. On the other hand, this is still very much a collection of member states, and very often those member states rise up against each other.