Source: Aspen Review - issue 3/2013
The European Union is currently facing one of the most significant challenges of its existence. An 'average' influenza epidemic causes between 3 and 5 million major illnesses annually and kills between 290,000 and 650,000 people. The health system can generally cope with these numbers without any significant problems. However, the coronavirus appears to be of a completely different order, with a completely disruptive character. In addition to the human suffering caused by death, severe illness and uncertainty about the course of the disease, the coronavirus also profoundly affects the socio-economic structure and infrastructure of the western part of the EU in particular.
The greatest danger of the corona crisis lies in the burden the virus imposes on the health service, if not isolated in time. More specifically, it has led to severe shortages of protective devices for essential services, a total overload of hospitals and the intensive care facilities within them. A crisis is difficult to predict; once there, its nature and course initially is mere guesswork. Rough, pre-determined scenarios, are adjusted on the facts and circumstances as they arise during the crisis based on expert advise. These, in turn, inform ad hoc decisions without full knowledge of the implications or guarantees for success. Only after the crisis ends, the facts will show what worked and whatnot, how adequately the authorities processed the available information, what value the expert advice provided in reaching more or less informed decisions, and how the politicians responsible dealt with all that. It seems evident to me that this is the domain of experts and not of politicians. It will enhance the chance of an objective account and provide the best opportunity to learn from the mistakes made. The fact remains that every crisis is unique and specific, and therefore comes with its often unpredictable dynamics.
The European fire brigade
The corona crisis also shows that Europe's potential, to a great extent, is made and broken by the way it handles these kinds of challenges. The pattern is well known: each Member State is committed to its own, functional or non-functional, sovereign course. While viruses do not respect national borders, health care is organized - effectively and fortunately, in most cases - by the individual EU Member States. As long as there is no crisis, no one should interfere in the internal affairs of another country. Suddenly, however, there is a crisis: let's say in a metaphorical sense, a violent, hazardous fire. Due to various budget cuts, it takes a long time before the fire brigade is alerted, taken out and is on the spot. There is great panic, and the accusations quickly spread that management has insufficiently equipped the local fire brigade to fight a fire of this size. Its sink or swim, and to prevent the fire from spreading to neighbouring plots and becoming uncontrollable, they turn to better organized and more prosperous entities in the area for financial assistance. These hesitate: they have often given support in previous crises, but gradually feel that the reliance on them by now is no longer without obligation. They cannot make their finances, equipment and capacity dependent on the needs of neighbouring forces which are not under their control, especially if these, time and again, demonstrate that their affairs are not in good order. It is time to draw the line somewhere. They, therefore, demand a commitment to a real improvement plan from their counterparts, before committing to the rescue again. The underlying insinuation of not being able to manage their affairs deeply upsets the management of the burning village. It launches an attack on the same leadership they have turned to -many times before, for financial assistance and accuses them of lack of ethics and solidarity. The umpteenth EU controversy has been born.
For perspective sake, it is worth noting that the United States, with its more seasoned federal structure, is also failing to pursue a strict federal policy in its efforts to curb the disease during these times of Corona - certainly under the current president.
Cut-and-paste deals in times of crisis
The EU has long ceased to be an economic community alone. The 1980s saw the need for greater integration between the Member States and harmonization of regulations to maximize the benefits of the common market and to better compete with countries outside the European Community. After the fall of the wall, Jacques Delors and Helmut Kohl heralded the next phase of the EU as a community of values, bringing us the accession of the former non-Russian Warsaw Pact countries in the east and the introduction of the euro to the west. This community of values, whose goal was the political and monetary integration of much of Europe, has by no means proved perfect. Particularly in times of crisis, many cut-and-paste deals are forged, and plasters attached to curb disastrous derailments. In each case, it appears that the differences in the socio-economic conditions and political structures of the different Member States make it difficult to arrive at a joint policy. It fuels the sentiment - and indeed not always rightly so - that some countries invariably hold hands and others can pull the wallet every time. Politically, this is dangerous ground, which puts a bomb under almost every consultation in which EU funds must be found, approved and allocated. This puts a lock on the EU, even though the benefits of European cooperation are evident (trade, business climate, Schengen, euro).
The assumed costs of the EU play a significant role in any discussion about Europe; the EU would be a money-consuming machine with mindless relocations and sky-high salary costs for civil servants and parliamentarians. As with any image, this criticism contains some truth, because it is difficult to imagine the real purpose of the periodic relocation of parliamentarians and staff between Brussels and Strasbourg. It is a well-preserved myth kept alive by many local MP to enhance their position, but in the grand scheme of things, it is acceptable. The EU's operating costs range from diplomatic service for external representation and the conclusion of trade agreements, housing, civil servants, parliamentarians, administration and other operational costs. The total part of the revenue not returned to the Member States in the form of incentives, support and other programs, account for approximately 7.6% of total expenditure. The net contribution of The Netherlands, the highest net contributor to the EU on a per capita basis, amounts to € 283 per year per capita (of which almost € 22 for the operation of the EU itself). This is a small drop in the bucket compared to the Dutch total government budget. Put differently, The Netherlands, in the performance of its public task, puts a burden of nearly 42% on its national income (GNI), while the EU's 'take' is only 0.6%. For an insight into the figures for other EU countries in this area, I refer to the separate appendix here.
A community fueled by maximizing self-interest ...
This poses the question whether the EU wants to continue to define itself by its (in)ability to extinguish ad hoc fires within a community aimed at collective self-interest, or by its courage and vision regarding European value(s) creation in the long(er) term? What the corona crisis shows is that the euro, the internal market and external borders now interweaves countries within Europe. Due to the far-reaching moral, social and economic connection, "everyone for himself" no longer is a valid option. So what is left of the European dream? In practice, the EU has for too long remained a community focused on value, a revenue model, rather than the community of values (the rule of law, democracy, socio-economic, etc.), it pretended to be. This attitude cultivates loss of confidence in political institutions, both in individual Member States as in the EU as a whole. The need for painful, sweeping and costly support operations and emergency measures in times of crisis has undermined support in the EU and has resulted in the loss of EU status on the world stage. The glamour has come to an end; the EU's economic and political potential undermined.
… or a community focused on European value (s) creation in the long (er) term?
The more dysfunctional our dealings with our declared EU values and the more intense our internal divisions are, the more powers such as China and the United States benefit and the more EU loses power, meaning and potential. The corona crisis mercilessly exposes Europe's vulnerabilities, making it a pervasive and valuable wake-up call and catalyst for change.
As long as the practical interpretation of the democratic, social, monetary, banking and economic principles of the various EU Member States continues to diverge, the EU will - without additional policies - remain imprisoned in impotence and inability to achieve its ambitions. Ambitions include hope, a sense of reality and responsibility. Aspirations should no longer be frustrated by the inadequacy of Europe's weakest links. Only if we strengthen these weakest links, tackle obstacles and develop a vision to maximize the EU's total potential as a value (s) community, we can accomplish these aspirations. This would, however, require a full revision of the EU treaty. Is naive to assume that this is possible without a struggle. The EU's shortcomings are apparent, and the need for action is evident. Opposing interests mean that there are still many political hurdles and much financial resistance to overcome. It will take a lot of time, significant adjustments, patience, political willpower and efforts to make this happens.
Outline for a new treaty
Ultimately, the review should aim at perfecting and accomplishing the community of values that underpin the EU. all changes to the EU treaty should contribute to this objective. It calls for raising the level of ambition at the same time as restoring confidence in the proper functioning of the EU treaty and boosting support for the EU as a community of values. As far as I am concerned, the following are high on to fix list:
Elimination of excesses unworthy to democratic values and the rule of law in the EU. Within an EU community of values, the rule of law and democratic values should equally apply to all and be non-negotiable.
Aligning social, monetary, banking and official principles. Many of the discussions within the EU can be traced back to inequalities in social systems amongst countries (social safety net, retirement age, health care, education). But also differences in monetary control (fiscal discipline, government debt), banking insights (lending, supervision) or administrative systems (syrupy bureaucratic procedures, archaic legislation, property registration) make Member States more or less vulnerable and thus potentially dependent on others.Only if these differences are addressed or even better eradicated, the EU will operate on a level playing field and stand firm in a competitive environment.
Centralization of foreign and security policy. Economic power without political power makes the EU toothless and vulnerable on the world stage and in its dealings with other superpowers in particular. In the current era, this is neither a viable nor an attractive political choice. The EU should have unambiguous external political representation and joint security policy. Current foreign ministries need to be transformed into ministries of European affairs and become the pivot between national and EU interests and needs.
Adjustment of decision-making procedures. All too often, individual countries within the EU may use their veto on specific issues, to influence other measures and decisions unwelcome to them. This undermines the effectiveness of the EU, both internally and externally, and is therefore highly undesirable. As far as I am concerned, unanimity as a condition for specific decisions should, therefore, be repealed. However, there should be sufficient guarantees that - within the limits of the democratic values and the high rule of law standards of the EU - reasonable desires of small groups of "dissidents" can be taken into account through opt-out provisions.
Entitlement to contributions is only possible when meeting agreed on standards. To promote support for the treaty changes to be made, and to facilitate the proper functioning of the ambition underlying the EU, entitlement to EU funds should be dependent on meeting all agreed standards in the treaty.
Fight against corruption. Corruption undermines confidence in the EU and affects support for it. Corruption cases tried in local jurisdictions, against local politicians, if it ever comes to that, are ineffective. If EU funds are involved, the European Court of Justice, after identification by the European Commission, should rule on corruption-related cases when EU member state politicians are involved. If convicted, this would result in the exclusion from any EU function (including participating in the European Council).
Timeframe and coverage of costs
The ambition that lies behind the desire for further value(s) creation is time-consuming. It will take significant adjustments, a lot of patience, political will and efforts.
Money is needed in the short term to deal with the social and economic consequences of the EU's corona crisis, especially in the most affected areas. It will require a sizeable financial injection either by drawing from pre-existing funds or through the issue of securities (Eurobonds).
In the medium term, additional European funds are needed (either through increased contributions from the Member States and/or the issuance of Eurobonds) to fund comprehensive reforms and to bring weaker European states up to an acceptable European level of social and economic standards. This is a gradual and sensitive process and will take at least ten years. The allocation of European funds should go towards removing the "pain" of these necessary reforms by protecting the affected economies against shocks en insecurity. The funds will be allocated based on national plans that must be tested at the European level (perhaps even with the help of the IMF) before any money is made available. Only this way, the EU can wrestle itself out of its self-created stranglehold.
In the long term (after the reform phase), each Member State will have to be able to stand on its own two feet and to adhere to the agreements applicable to all on pain of losing community contribution and/or influence. Exceptions can only be made in crises with the prior approval of the European Council.
It will be apparent that all this is impossible without a massive injection of capital. We have already seen that the EU budget is modest, certainly in comparison to the share that "national authorities" appropriate for themselves. The total contribution from the Member States is now 0.9% of EU GNI as a total. With an average increase in the EU's contribution of 50%, this GNI burden will increase to an average of 1.57%, while national budgets will reduce in size. In nominal terms, this amounts to € 92.5 billion in additional available resources each year to finance the necessary reforms and to bear interest and principal.
In conclusion
Resistance to additional contributions has always been strong, especially in the Netherlands and other northern Member States. However, the corona crisis shows what happens when you are in an imperfect union with countries with different democratic traditions and budgetary options. It results in fights, failures and a loss of standing. A standstill or status quo is no alternative in this regard: stagnation is decline and leads to a European downward spiral. This should not be an option for citizens nor politicians. The plan mentioned above includes proposals to increase the level of ambition and potential of the EU, is aimed at increasing confidence in the system and includes build in levers for support. In combination, they serve as the basis for a new start. Let's use the coronavirus' death and disruption, as a catalyst for EU-wide healing capacity and a new impetus for a healthy and prosperous EU.
THIS ARTICLE WAS TRANSLATED FROM THE DUTCH ORIGINAL POSTED APRIL 5, 2020, USING GOOGLE TRANSLATE AND GRAMMARLY