[FR] Europe, still a work in progress

“Never let a good crisis go to waste” is a phrase often attributed to Winston Churchill. A softer version is: “Crises are challenges” or “opportunities”. There is a stronger version, and now I am quoting myself: “The great decisions in life and elsewhere are made: on the brink of the abyss, with your back against the wall and a knife to your throat”.

The same applies to the EU. Jean Monnet already knew this when he made his famous statement: “Europe will be built in times of crisis and will be the sum of the solutions to those crises”.

What is our experience of crisis?

During the long crisis in the eurozone (2010-2012), we strengthened the governance of the eurozone in order to prevent future crises.

But it must be said that EMU has made little progress since 2012. Even the banking union has not been completed. Once the storm and crisis had passed (at the end of 2012), there was a lack of political will and courage to create a genuine EMU. The temptation of ‘business as usual’ when things are going better! During the refugee crisis, work began on strengthening the Union’s external borders with a European coastguard. It was not until four years later that the debate on an immigration pact was launched. The reason for this is that Member States were unable to agree on the solidarity aspect of this pact (which was also a problem in the eurozone crisis) and only managed to agree on the need to stop mass irregular immigration, which has been achieved.

The current pandemic is another good example of a policy that can only emerge under pressure. As soon as things improved over the summer, the measures were relaxed, leading to a second wave. Once again, this outbreak is only being tackled with our backs against the wall. Nevertheless, the coronavirus crisis has forced decision-making at European level in the economic sphere. An unexpected breakthrough has been achieved with the Recovery Fund, which has enabled the Commission itself to borrow on the capital market and will provide more non-repayable grants than loans (albeit at extremely low or even non-existent interest rates). The Recovery Fund features two major innovations:

• The remedies are not a ‘definitive’ solution, which had almost never been the case before. In any case, what is definitive in this world where everything is in flux? This is due in part to external factors, but also to specific political initiatives (Brexit, trade wars).

One exceptional event was the reunification of Germany, for which the momentum of the fall of the Berlin Wall was used to create something irreversible, something “definitive”. Chancellor Kohl seized this “opportunity” when history came knocking.

This has always been the case over the last seventy years. Brexit is an exception. However, one may wonder whether the agreement of 21 July 2020 on the Recovery Fund could have come about if the UK had still been a member of the EU. Perhaps a fund solely for the eurozone would have been created in the end, rather than a truly European fund. I was in favour of the UK remaining in the EU, but there were drawbacks. It was only after the British referendum that we made a leap forward in European military cooperation. But the UK did not prevent us from going further in deepening the Union (the euro!) with the Maastricht and Lisbon treaties, provided that they included an opt-out clause.

I once said that for the EU, direction was more important than speed, but is that still true? There are new factors that make decision-making more difficult. I will list them. Digital technological developments, geopolitical changes with an expansionist China and a retreating America, the ravages of climate change, social unrest in each of our Member States (due to individualisation, the hyper-presence of social media and growing inequalities) make it difficult to act quickly. However, speed is important. There is a sense of urgency.

The Conference on the Future of Europe must take this into account. We must not waste time on institutional debates, except on the transfer of certain competences (in the field of health) and on all those aspects that speed up and facilitate decision-making, by adapting the unanimity rule. We could, for example, introduce something between consensus and qualified majority. Now, the Conference must focus on the policies to be pursued. If we want to put an end to the disenchantment and anger of many citizens, we must achieve results in a number of areas: employment, irregular migration, climate, violence and terrorism, pandemics, inequalities. The citizens’ agenda must come first. But it is not just a matter of listening. The EU must also provide solutions. People talk a lot about the “democratic deficit”, but there should be no “leadership deficit” either.

I would like to emphasise climate policy. The Commission has already presented proposals in a number of areas, some of which are supported by the European Council. The Green Deal is the major project of this legislative term. The drastic strengthening of the 2030 emission targets (from -40 to -55%) will be discussed in the Council in December. The fight against climate change can no longer be postponed. The climate and biodiversity are in crisis. Moreover, there is a direct link between the pandemic and the climate, among other things through deforestation. That is why it was important for climate investments to account for 37% of the Recovery Fund. This is a good example of integrating long-term measures into short-term ones.

In order to move forward in the Union and avoid deadlock, there is often talk of a ‘two-speed’ Europe. There are already de facto differences between Member States. The most significant difference is between countries that have adopted the euro and those that have not, which partly coincides with the distinction between Central and Western Europe. But there are also major differences of opinion within the eurozone. Think of the four ‘frugal’ countries, two of which are in the eurozone and two of which are not. I don’t believe in this two-speed story.

In the longer term, the greatest danger to the unity of the Union is the tension between countries that are classic democracies and those that violate or threaten a number of freedoms. Of course, elections in these countries can change the situation. The agreement between the anti-populist mayors of Warsaw, Budapest, Prague and Bratislava shows that societies are changing. Tension between urban and rural areas is a phenomenon that exists in all countries.

In short, the “two-speed” model is too simplistic. Once again, many things are in flux.

The “multiple crisis” has certainly reinforced the idea of a “fortress Europe” in the public mind. That is why it was a good thing that, after some hesitation on the part of France, accession negotiations were started with North Macedonia and Albania. Croatia became a member in an atmosphere that was already described at the time as “enlargement fatigue”. Negotiations with Turkey are at a standstill. In fact, they are over. Given the total loss of mutual trust, we will have to wait until the EU considers closer cooperation, other than accession.

There is accession, but there is also exit. The United Kingdom has always been a special member, and indeed the least integrated of all, as it is neither a member of the eurozone nor the Schengen area. Migration and the refugee crisis may have made the difference between 52% and 48%. Brexit has become an increasingly populist English project and an example of nostalgic nationalism (as found in other countries, even among major geopolitical players). Since the referendum on 23 June 2016, the EU has been remarkably united in its attitude towards British governments. This unity has been embodied by the Commission and chief negotiator Michel Barnier. This was one of many miscalculations on the British side. In addition to Brexit, there may be no agreement on the future relationship, meaning a hard landing, the economic cost of which is several times higher for the UK than for the EU-27. In any case, it is a political and economic loss for the Union. However, the European caravan is moving forward. It remains united at 27. But it is not certain that the United Kingdom will remain united. Support for Scottish independence is at its highest level ever: 58% of those who have made up their minds would vote ‘yes’ to independence.

The crisis caused by the current pandemic has also led to a number of notable changes in attitude within the Union.

For example, many citizens were surprised to find that the Union was almost absent in the spring when the crisis began. Health is a national competence, but few people knew this. Citizens saw that each country was responding differently and that borders were gradually closing, as in the period before Schengen. It became clear that Europe was not a superstate! Many then called for ‘more Europe’!

Another notable development was that Germany regained its prestige in southern European countries by declaring its willingness to grant up to €500 billion in subsidies, non-repayable transfers to boost their economies. The austerity measures that were so controversial in a number of countries during the eurozone crisis were therefore also abandoned by Germany. The pandemic broke down taboos such as the Stability and Growth Pact, state aid, public authorities subsidising private sector wages (up to 25% of the workforce during lockdown), the widespread introduction of remote working, mergers between large European companies, national budgetary balance, the attitude towards China, the strengthening of climate targets, the ECB’s hyper-expansionary policy for years, and so on. The paradox is that Germany itself was one of the first to sacrifice most of its taboos. Is all this temporary or permanent? The Covid-19 crisis is far from over. It is a period that is giving taboos a hard time.

Allow me to raise, in this context, a question that is often asked: why is the increase in deficits and public debt less dangerous today? Until recently, this was a taboo question! The IMF says that austerity will not be necessary for rich countries and could be counterproductive. This is surprising, as the IMF has always been a staunch advocate of fiscal prudence. The key to the answer is that borrowing costs and interest rates will remain below economic growth rates, with beneficial effects on debt.

There is also a consensus that long-term policy should focus on stronger productivity growth in order to improve living standards and adapt to a post-COVID-19 world. This could involve more public investment in infrastructure, particularly digital and green infrastructure; more investment in human capital so that the workforce can be prepared for the transition to the types of jobs that are likely to be created in a post-COVID-19 world.

But our society demands prosperity for all, especially among EU countries that reject the Anglo-Saxon model. The social issue has been at the heart of the social debate for several years. The pandemic is creating new inequalities. Inequalities within and between European countries are unfortunately widening rapidly. Not everyone can protect themselves from illness and death in the same way. Not everyone can work remotely. Not everyone will soon have access to the vaccine in the same way. Older people are at much greater risk to their health than young people, but young people are losing their jobs more quickly. Inequalities are also linked to the policies pursued in each country. The fight against inequality is primarily a matter for national governments, but the EU also has a duty of solidarity based on its multiannual budget and recovery measures for the regions most affected by the crisis. It has done so.

In the meantime, the world continues to turn, but not as before. Look at the growth rates of China and other countries. In 2020-2021, China will see 9% growth (on an annual basis), Germany a 2% decline and the United States an 8% decline! This reflects the differences in the effectiveness of anti-virus policies. China was the first to enter and exit the pandemic. Look also at the growth figures for the BRICS and other emerging economies, which until recently served as examples to illustrate the benefits of globalisation. A historic recession, with figures of -12.5% in India and -6.5% in Brazil. The pandemic shows how weak governance is in some countries, emerging and otherwise. This is about much more than a distinction between democracies and authoritarian regimes. There are major differences within both groups. Compare China’s situation with Russia’s lamentable one. Covid-19 has also revealed the weaknesses of certain economies, as crises often do. In addition, 120 million more people find themselves in extreme poverty after decades of rapid decline.

The current crisis has also made us aware of the EU’s heavy dependence in many areas: medical equipment and medicines, energy, digital technologies (which have made the crisis more bearable economically and emotionally). The concept of sovereignty was already present before the pandemic. I am thinking of European defence, greater reluctance on the part of Europeans to accept Chinese investment in strategic sectors, and the role of the dollar as a political instrument. This desire for European sovereignty is linked to the current form of globalisation, which is based too exclusively on the market, which provides too little protection, but it is also linked to the crisis in the West (Brexit, Trump). The EU must take its destiny into its own hands. It must find its place in a changing geopolitical landscape. How can it play a geopolitical role when it is so dependent on other countries in certain strategic areas? But we must also ask ourselves the following question: how far can we go in protecting our interests and autonomy without falling into protectionism? More than ever, it is clear that no country can face this new geopolitical situation alone. In fact, France and Germany are now cooperating more closely at the macroeconomic and microeconomic levels. The United Kingdom is unaware that a new world is being created. It lives in a world that no longer exists. Isolation is no longer splendid!

However, the Covid crisis has not united the world, even though the virus itself knows no borders. Many multilateral institutions are in crisis (WTO), have lost their relevance (UN Security Council), or have been weakened (UNFCCC). Of course, the negative attitude of the Trump administration plays a major role in this context, but it is not the only one. Some countries are merely paying lip service to multilateralism. Yet what we need now is the opposite: more global governance. The EU is very (too) sincere in its support for the international order. The only positive point is the willingness of China and the EU to become climate neutral by 2050 or 2060. Of course, this must be implemented!

In short, this pandemic is triggering less rather than more international cooperation. I am not even talking about the rise of nostalgic nationalism represented by Turkey and Russia, although their economies are too weak to finance their political and military ambitions. However, these countries are neighbours of the Union and are very aggressive in Syria, Libya and the territorial waters of Greece and Cyprus. The Union cannot be a geopolitical player if it cannot play a real role, particularly in its neighbourhood. Recent incidents in the Mediterranean are, unfortunately, not very encouraging.

The increase in extreme poverty, particularly in Africa, should also allow us to refocus on this neighbouring continent. To a certain extent, this was already the case before the coronavirus. The reasons for interest in Africa are different for China (raw materials) and for the EU (migration). The level of debt in a number of African countries is also an urgent problem. European countries have already eased their debt burden. According to the World Bank, a new financial crisis cannot be ruled out, which would originate in the poorest countries.

Throughout the crisis, the values of responsibility and solidarity have played an important role. In the current health crisis, the EU as such has virtually no “responsibility” to assume. As far as solidarity is concerned, it is practising it, although, as always, it is difficult to get 27 countries to agree. Solidarity was and remains highly controversial when it comes to migration. The Commission even proposes different types of solidarity. With regard to climate, a transition fund is planned for certain countries. Everyone remembers the ordeal of the eurozone crisis in achieving solidarity in exchange for strict measures to bring order to certain national economies. But each time, tangible solidarity has been achieved amid the rise of individualisation, particularism and nationalism. Thanks to this solidarity, Europe remains unique. This is how we recognise “our” Europe.