One member state has become a dictatorship as others spiral into debt. Germany must lead the European Union through the coronavirus crisis
“Europe will be forged in crises,” said Jean Monnet, one of the founding fathers of the European Union, “and will be the sum of the solutions adopted for those crises.” What kind of Europe emerges from the coronavirus crisis will depend on the answers given to three tests.
Firstly, the Hungarian test: can a dictatorship be a member of the EU? Even before this year, Viktor Orbán and his Fidesz party had so far eroded democracy in Hungary that the country would not qualify for admission to the EU if it were a candidate for membership. He has now used the coronavirus pandemic as justification to take sweeping emergency powers, allowing him to rule by decree for an unlimited period. Hungary is – for the duration of these powers – a dictatorship. Monnet also said a dictatorship cannot be a member of the European Community (which subsequently became the EU). Today, one is.
The sanctions available to EU institutions are slow and complex, but there is one organisation that can and should act decisively now: the European People’s Party (EPP), the hugely influential centre-right grouping to which Fidesz still effectively belongs. (Although the party is notionally suspended, Fidesz MEPs still operate as part of the EPP group in the European Parliament.) The EPP should have kicked Fidesz out long ago. Instead, it has pursued a policy of appeasement. If it does not expel the Hungarian dictator’s party now, it will lose any last shreds of credibility. When EPP politicians make fine speeches about democracy, the rule of law, and European values, young Europeans will be more than justified in shouting: you utter hypocrites!
Next, the Italian test. Is there solidarity in the heart of Europe? Will the eurozone enable its hardest-hit member states to recover? Last month, we watched with horror as one of the most highly developed parts of our continent, with one of the best health services, was overwhelmed by the pandemic. When Italy emerges from this Gehenna, it will face a huge challenge of economic recovery, handicapped by the fact that it already has one of the eurozone’s heaviest burdens of national debt. Its ability to borrow the large sums needed will depend on the credibility of mutual support inside the eurozone.
There is an EU without Britain. There is no EU without Italy.
Even before the pandemic, Italy had gone from being one of the most Europhile countries in the EU to one of the most Eurosceptic. The crisis has exacerbated these feelings. In one poll conducted early last month, 88 percent of Italians said they felt that Europe was not supporting Italy, and a staggering 67 percent said they saw EU membership as a disadvantage. There is an EU without Britain. There is no EU without Italy.
And, finally, there is the test facing Germany: can it save the day? Will Europe’s central power finally face up to the logic of a monetary union from which it has very significantly benefited? Germany has produced the most impressive national response to the pandemic of any democracy outside Asia. Its provision of large-scale testing, ventilators, and critical care beds shows the advantages of having both good public services and a strong medical industry. Chancellor Angela Merkel gave an outstanding television address to the nation – a lecture on democracy, solidarity, and individual responsibility, delivered with the brain of a scientist and the heart of a pastor’s daughter. Only one thing was missing. The word “Europe” was not mentioned.
In the meantime, Germany has shown solidarity with its hard-pressed European neighbours, sending consignments of face masks to Lombardy and transporting critically ill Italian and French patients to German hospitals. But it is in responding to the economic and political crisis that German leadership is really called for.
Germany can help Europe pass the Hungarian test, not least because Merkel’s Christian Democrats are the most powerful party in the EPP. Now, they must surely come out for the expulsion of Fidesz. All the candidates to succeed Merkel as leader of the Christian Democrats should be asked where they stand on this.
It is in meeting the Italian test, however, that Germany’s contribution will be decisive. As one recent headline put it, Italy’s future is in German hands. If the eurozone – and, therefore, Europe – is to recover its economic health, the Italian government and other southern European governments must be able to borrow money using the financial credibility of Germany and other northern European states. In the dry jargon, there would be “debt mutualisation”. Next to Italy, Spain has been hardest hit by the crisis. The Spanish prime minister, Pedro Sánchez, has talked of the need for Europe to build a “wartime economy” and appealed for a new intra-European Marshall Plan.
Seven leading German economists have cogently argued that this recovery plan should include the issuance of €1 trillion of community bonds, jointly guaranteed by all eurozone governments. Unlike the eurobonds discussed after the financial crisis, this would be new money, dedicated to addressing the results of a disaster for which no southern European government could possibly be held responsible. To ask how precisely this support is best given would take us into the acronymic weeds of ECB, EIB, ESM, and even EFSM (don’t ask). But the basic question is simple: having cast aside its own fiscal taboos (“debt brake”, “black zero”) to help itself out, to the tune of what may well turn out to be close to €1 trillion, is Germany prepared to do a fraction of that to help other countries in the same boat? In the case of a monetary union, “the same boat” is not just a loose metaphor. Whatever package European leaders agree upon this week, it must be big, and be seen to be big.
Germany’s leading tabloid, Bild, recently published an open letter to Italy headed “We are with you!” It praised Italy for having brought “good food” to Germany and concluded: “Ciao, Italia. We’ll see you again shortly. Here’s to an espresso, a vino rosso, whether on holiday or in the pizzeria.” An interesting idea of solidarity. A few days earlier, the same paper published an article headlined “What will become of the euro? Debt mutualisation is threatened.” Dear Bild reader, what Italy needs is not your custom over a holiday espresso in Tuscany, charming though that would doubtless be, but the mutualisation of debt, as a necessary consequence of a European monetary union from which you, dear Bild reader, have benefited greatly.
There is one person in Europe who can both take and defend the necessary actions: Merkel. Last year, I argued that Germany needed a change of government, because the grand coalition was exhausted and was strengthening the political extremes in opposition to it. That is out of the question now, in the middle of a force-10 storm. Instead, Merkel has an unexpected last chance to go down in history as a major architect of a stronger EU. Bismarck said a politician’s task is to hear God’s footsteps advancing through history, and then jump to hang on to his coattails. That coat is passing now.
This article first appeared in The Guardian.
The European Council on Foreign Relations does not take collective positions. This commentary, like all publications of the European Council on Foreign Relations, represents only the views of its authors.