Will the coronavirus crisis tear the European Union apart?

EU leaders have warned that failure to agree a unified response to the pandemic could destroy the European Project

Angela Merkel is resisting calls for the EU to issue "coronabonds"
German Chancellor Angela Merkel is resisting calls for the EU to issue "coronabonds" Credit: Michael Kappeler/DPA 

The coronavirus pandemic has ripped away the EU’s mask of unity and now poses an existential threat to the European Project. 

Faced with the crisis, the EU’s member states have turned on each other and reopened the crudely sutured wounds of the financial crisis.

Then, as now, northern eurozone countries are being asked to bail out poorer, southern countries, who bridle against the north’s lectures on financial housekeeping. 

The infighting was brutal enough to convince Jacques Delors, the former European Commission president and architect of the euro, to intervene. 

The 94-year-old made a rare public warning that the lack of solidarity in the face of the virus posed a “mortal danger” to the EU. 

The EU’s initial reaction to the crisis, which has proved more divisive than Brexit, was poor. 

Italy used the EU’s civil protection mechanism to put out an urgent call for face masks. No EU country volunteered to help before China stepped in with aid. 

Germany banned the export of medical equipment, even to fellow EU countries. Border controls were reintroduced in the bloc’s passport-free Schengen Zone. 

But it is the issue of “coronabonds” that has laid bare the mutual distrust between EU countries. 

Giuseppe Conte, Italy’s prime minister, urged his fellow EU leaders to create the mutualised debt instrument. It would be guaranteed by all member states, to help the economy recover. 

Germany and the Netherlands have no desire to underwrite debt to fund spending in other countries. Berlin’s critics point out that debt mutualisation is the logical consequence of EU monetary union and the single currency. 

Berlin, the EU’s largest economy and biggest beneficiary of the euro, resisted common eurozone debt issuance at the height of the 2008 crisis that almost spelled the end of the single currency. 

Italy, the EU country worst hit by the virus, was supported by eight other member states, including France and Spain, during a teleconference summit of EU leaders last week. 

Emmanuel Macron, the French president, said the “survival of the European Project” was at stake. 

Angela Merkel and Mark Rutte, the prime minister of the Netherlands, were unmoved. “I cannot foresee any circumstance under which we will change our position,” Mr Rutte said. 

The five hour “e-Summit” ended with the issue being kicked back to EU finance ministers, who must now try and find a compromise next Tuesday. 

Tempers were frayed. Wopke Hoekstra, the Dutch finance minister, had demanded an investigation into why some countries had not saved up enough money to weather the crisis. 

"That statement is repugnant in the framework of the European Union,” Antonio Costa, the prime minister of Portugal, said. “No one has any more time to hear Dutch finance ministers as we heard in 2008, 2009, 2010 and so forth.”

Jereoen Dijsselbloem, a former Dutch finance minister and ex head of the Eurogroup, faced calls to resign in 2017 after telling a German newspaper that financial crisis-striken southern countries had wasted their money on “drinks and women”. 

“Either the EU does what it needs to be done or it will end,” the centre-left Mr Costa added. 

Pedro Sanchez, Spain’s socialist leader, warned that Brussels must react faster than it did in bailing out Spanish banks or risk losing support in his ardently pro-EU country. 

Hostilities have not ceased, with Italian politicians taking out a full page ad in an influential German newspaper, urging the country to “not be like the Netherlands”. Enrico Letta, a former Italian prime minister, warned that the EU was in "mortal danger" and predicted attitudes in Berlin and the Hague would change as the coffins piled up. 

Amid the tumult, the authoritarian Viktor Orban secured sweeping new powers to rule by decree to combat the virus, leading to accusations that the EU had a first dictatorship among its member states

With health policy largely a national responsibility, the European Commission has a coordination and facilitation role which EU diplomats describe as “not to get in the way” of the member states. 

The executive has relaxed its tight fiscal rules for national budget and state aid laws to give governments more flexibility in the fight against the economic impact of the outbreak. 

But the commission has also made things worse in its struggle to appear more relevant. 

Ursula von der Leyen, the president of the European Commission and a former minister in Angela Merkel’s government, appeared to dismiss coronabonds as a “slogan” in a German interview just two days after the failed summit. 

Faced with Italian fury, the commission spin machine insisted that nothing was taken off the table. 

Mrs von der Leyen dispatched Paolo Gentiloni, the former Italian prime minister and EU commissioner for the economy, to Italy.  His intervention, which will do little to allay suspicions that Mrs von der Leyen is not a true European leader but a puppet of the member states, told the real story. 

Mr Gentiloni said that mutualised debt would never be agreed. Calling for consensus, he said that compromise with Germany was vital or “the European project is in danger of dying out".

The Dutch and the Germans will try to steer the compromise towards existing debt instruments created after the financial crisis, which come with strict rules and conditions.

Mrs von der Leyen’s big idea is to use the coronavirus crisis to reinvigorate stalled intergovernmental negotiations over the next EU Budget. 

She argues that certain governments, including Germany and the Netherlands, should drop their resistance to being asked to pay more to Brussels to help the economy recover from the pandemic.  

It is a particularly uninspiring cause to rally behind at a time when more than 10,000 EU citizens have died from the virus in Italy. 

Brussels prides itself on using any crisis to push forward the cause of greater European integration.

So far, the EU has only succeeded in exacerbating its divisions. 

 

License this content