EU Finance Ministers recently agreed on several common financial measures to protect countries in the EU that have been particularly affected by the coronavirus crisis.
The measures, yet to gain final approval by the respective EU countries’ leaders, includes a joint employment insurance fund worth 100 billion euros, 200 billion euros of liquidity made available for companies via a European Investment Bank instrument and also 240 billion euros worth of credit made available for members to spend on tackling the virus. The measures were agreed after finance ministers failed to find an agreement on Wednesday.
This is a significant development. Had finance ministers failed to find an agreement, the long-term viability of the EU project would have been brought into jeopardy. Indeed, the Italian Prime Minister, Giuseppe Conte, was right to state in an interview with the BBC that the EU could fail over the coronavirus outbreak.
A failure to agree on these financial measures would have been substantial because it would have shown that cooperation and cohesion are lacking among the EU member states. As the failure to agree on a deal earlier in the week and the continuous disagreement over so-called coronabonds shows, even during a crisis affecting the whole bloc member states still struggle to put their respective interests above those of other member states and the EU project.
The disagreement over so-called coronavirus bonds, which is essentially a disagreement over debt-sharing among member states, is particularly interesting. One would have thought that the EU member states would have been desperate to do everything possible, including debt-sharing, to ensure all member states survive the fallout from the coronavirus crisis. However, some states, such as Germany, the Netherlands and Austria, have shown that they are reluctant to share in the financial burden of bailing out other member states during this crisis. This is surprising as one would presume that debt-sharing is a price worth paying if it supports other member states and, as a consequence, helps support the EU economy and helps ensure the viability of the EU project.
Given that the viability of the EU has been threatened by Brexit and the rise of nationalism in some member states, it is surely in the interests of countries like Germany, the Netherlands and Austria to support other member states through this crisis, even it involves debt-sharing because it will ultimately help ensure that the EU does not fall apart.
Of course, debt-sharing is controversial among nationalists in some member states. Yet, the reluctance of countries like Germany, the Netherlands and Austria to agree to debt-sharing is perfect ammunition for nationalists throughout Europe who could use it to argue that the EU does not serve the interests of their respective countries.
The difficulties in finding an agreeable financial solution to help member states overcome the coronavirus crisis is not surprising. Far from it, it highlights one of the inherent difficulties the bloc has always faced: how member states can reconcile their own economic and political interests with those of the EU.
Although the EU has survived crises before, such as the 2008 financial crisis and Brexit, the coronavirus crisis will again test its viability. No doubt Italy will remember that, in addition to the help it received from EU member states, other countries, such as Russia and China, also came to its aid.
The coronavirus pandemic has highlighted the difficulties the EU faces in holding itself together. The current structure of the EU enables member states to prioritise their domestic political and economic interests over the interests of the bloc as a whole, which seems untenable leading into the future.
It appears that the long-term viability of the EU hinges, in part, on further integration among member states so that the respective political and economic interests of member states do not trump the political and economic interests of the EU. If such integration does not occur, the EU will face the same problems again when the next crisis occurs and will spend the rest of its existence struggling to hold itself together.
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