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Coronavirus and the EU's 'Triple Crisis'
By: Neil Dooley
Last updated: Wednesday, 10 November 2021
The ‘triple crisis’ has shown that EU crisis-management is routinely limited by competing member-state preferences. This time, divisions in the Eurogroup have hindered agreement on an economic response. Such divisions may also threaten to reignite the leftover tensions of the EU’s erstwhile triple crisis.
The response to the eurozone crisis was, initially at least, characterised by member-state division and intransigence, narratives of Southern European ‘immaturity’ and financial assistance accompanied by austerity without growth, rather than burden-sharing. While this is far from the whole story, these legacies of the eurozone crisis continue to cast a long shadow.
Today, talks between eurozone finance ministers have failed to reach agreement on economic support measures. North-South divisions have re-emerged as nine member-states, including France and Italy, push for a new joint-debt instrument to be created to share the enormous costs of economic lockdown. Like Eurobonds before them, ‘coronabonds’ are strongly opposed by German, Dutch and other governments. Member-states are also clashing over the strings which should be attached to bailouts, with Italy insisting on unconditional support while some Northern countries insist on conditionality on European Stability Mechanism (ESM) loans. Narratives of ‘peripheral immaturity’ have resurfaced too, as Dutch Finance Minister Wopke Hoektra mused that the EU should investigate why certain eurozone countries don’t have enough fiscal strength to cope. The Eurogroup reconvenes on Thursday April 9th and will seek to find compromise. Unless ministers can move beyond respective narratives of core-periphery mistrust, inherited from the eurozone crisis, this will be difficult.
We haven’t fully returned to 2009, however. First, any conditionality attached to the ESM credit is likely to be substantially milder than that associated with troika programmes, and EU fiscal rules will also be relaxed (as will EU state-aid rules), none of which is insignificant. Second, alongside a range of important measures, the ECB’s “Pandemic Emergency Purchase Programme” (PEPP) provides the bank with extraordinary powers to buy government bonds, which contrasts with delays and disagreements prior to 2012. Third, “SURE”, a new €100bn instrument has been proposed by the European Commission, and supported by Germany (but not wholeheartedly by the Dutch), to assist national unemployment insurance schemes, and the European Investment Bank has announced financial assistance for enterprises. These are real positives, but a danger remains that the longer-term legacy of the Eurogroup’s response is a deeper entrenchment of divisions between the eurozone core and periphery.
The response to the refugee crisis in 2015 was similarly characterised by clashes between member-states. As Moravcsik and Schimmelfennig have argued, member-states were united only to the extent that each wanted to reduce migration flows, and each wanted to shift the costs of the response to others. The division during this crisis was drawn between Central and Eastern and Western member-states, principally over coordinating relocation, accepting refugees and border-closures, including Austria and others ‘unilateral’ closing of the Balkan route and Hungary’s construction of a border fence. Divisions also emerged relating to ‘burden-sharing’ between Northern and Southern member-states such as Greece and Italy. Moreover, ‘morality plays’ and prospects of Grexit were repeated, this time over Greece’s management of Schengen. Recently, thousands have travelled from Turkey to Greek northern borders, while in the reception centres, the first confirmed coronavirus infections have been reported. The EU has responded by providing financial assistance to Greece, but without common asylum system reform and an agreement to relocate refugees from centres which are ill-equipped to cope with an outbreak of COVID-19, thousands of people living in overcrowded and unsanitary conditions are particularly vulnerable.
The third dimension of the triple crisis, Brexit, represented rising hard-Euroscepticism and a manifestation of European disintegration. Although the EU response is ongoing, the initial stage was remarkable precisely because of the “strong and shared emphasis of EU unity” among member-states. In comparison with the other dimensions, Brexit looked like a turning point for how the EU manages crises. There was real solidarity too. The interests of Ireland, a small, peripheral EU member-state, were championed by Germany and others, and elevated to become one of three priorities enshrined in the Commission’s negotiating mandate.
Unfortunately, in the context of the three other crises, the EU27 response to the first phase of Brexit negotiations looks like something of an exception. Moreover, an inadequate response from the Eurogroup risks interacting with the legacies of Brexit. In the immediate aftermath of Brexit, hard-Euroscepticism has played a muted role in elections across the EU27 . If the eurozone emerges from the coronavirus crisis without signalling convincing burden-sharing, it may also emerge more deeply divided between North and South. In this scenario, it isn’t inconceivable that the worst hit countries, like Italy, could see a rise in support for exiting the EU.
A response to the coronavirus crisis that is predominated by member-state division will interact with the ongoing legacies of the EU’s triple crisis in damaging ways. Jacques Delors has warned that a lack of EU solidarity poses a “mortal danger to the European Union”. There are already signs of public opinion shifting against the EU in Italy, and it’s not hard to imagine that market perceptions of a lack of unity could signal chaotic days ahead for the public debt of Spain, Italy, and others. While the EU has already outlived countless of its own eulogies, an absence of burden-sharing between member-states at a moment like this may risk rising Euroscepticism and an asymmetric spreading of the costs of, and recovery from, the pandemic. But the EU has the capacity and, moreover, the opportunity to overcome such disintegrative tendencies. To do so at a time when multilateralism is already in crisis, and G20 coordination has been disappointing, would not only provide the European project with an enormous reputational boost within its borders, but would also be a chance to attempt to diffuse the norms of cooperation, burden-sharing, and solidarity globally. If the EU was looking for the moment to assert genuine ‘normative power’, and to build trust and unity, surely this is it.
Dr Neil Dooley, Lecturer in Politics in the Department of Politics at the University of Sussex, where he teaches European Union Politics and International Political Economy. Neil's primary research interest concerns the asymmetry of the European sovereign debt crisis, such that peripheral states have been more severely affected.
Maria Matiou, a Phd Candidate in the Politics Department, University of Sussex and her research focuses on German power in the EU of polycrisis.
This blog is part of the
SSRP Forum: the Pandemic and Sustainability
This forum aims to contribute to the analysis of the impact of the pandemic on sustainability and the Sustainable Development Goals (SDGs), and to offer policy recommendations on how to respond to this unprecedented challenge.
The spread of coronavirus (COVID-19) presents us with an unprecedented challenge. We see losses of human life around the world, while one can hardly think what will happen if and when the pandemic reaches poorer countries with weaker economic and health structures. We see countries shutting down their economies to avoid the spread of the virus, as well as employing unprecedented measures of social distancing and population lockdown. We see whole economic sectors and households entering the intensive care of public financial support. In less than a month, the pandemic has redefined the priorities, parameters and boundaries of ‘what is possible’ in much of the world that we constructed since the Second World War.
The most urgent question is how to deal with the humanitarian crisis currently evolving and prevent it from getting out of control at a global scale. But a question we must also face is how the currently unprecedented mobilisation of public resources will be used to support our transition to a sustainable future, rather than a return to a socio-environmentally unsustainable past. One can hardly overstate the urgency of both these tasks. We in the Sussex Sustainability Research Programme (SSRP) community aim to contribute to this ‘mobilisation’ effort by setting up this Forum which aims to bring together experience, knowledge, ideas and recommendations to inform public responses to the pandemic and the implementation of Sustainable Development Goals (SDGs) at both local and global levels.