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A European Union in Sickness and in Health

27 May 2020
By Amin Bagheri
A box of masks is unloaded from a cargo plane in Milan, Italy. Source: European Union

Over the past decade, the European Union has been under increasing pressure from Brexit, refugee issues, and a recession, but it has overcome each and survived. Now, the situation created by the deadly Coronavirus pandemic leaves the European Union’s survival in doubt. 

In acute and critical conditions, we have always witnessed the humanitarian assistance to nations and countries all over the world. The EU is the world’s leading humanitarian aid donor, providing a major proportion of global funding for emergency relief to victims of man-made and natural disasters. But this time, the crisis is so widespread that it seems that all the political, social, and economic dimensions combined pose a major dilemma.

In addition to worrying about the deaths of hundreds of thousands of people, the economic downturn that has accompanied the virus will be a major setback to the unity of the continent. The economic shock caused by the crisis could easily go beyond the 2008 financial crisis. Keeping people away from each other will reduce the economic activity of all members of society. In the coming weeks and months, people will be working less, investing less, and spending less. People’s incomes and expenditures will inevitably be upset, and businesses are likely to be downgraded unless government officials commit to stabilising the country’s economy.

But the question is, do EU member states have such financial resources? Examining the situation of the three member states of the European Union – Italy, Spain and France – it can be said that the assurance of such financial support is doubtful. Italy, the worst-affected country in Europe, has repeatedly called on its European allies to help deal with the crisis, but so far none haves been warmly welcomed.When Italy entered the crisis, its debt-to-GDP ratio was 134 percent. That was about 100 percent for Spain and France. With the sharp rise in bond yields, there is no significant economic stimulus.

The Coronavirus has put Europe’s two major economic powers, France and Germany, in the red, and the International Monetary Fund has announced negative economic growth. After a decade of growth, the German economy is likely to shrink by 6.3 percent in 2020. The crisis has cost the German government about €1trillion, forcing Germany to take unprecedented steps to keep the economy afloat.  Therefore, Germany cannot be expected to be able to help other EU countries as it has done in previous crises. As German Finance Minister Olaf Schultz says, “reliance on Germany” alone is not enough, and markets must now see a real and significant increase in their economic strength to regain confidence.

The outbreak of COVID-19 has exacerbated the economic crisis for countries such as Italy, with the prime minister stressing that Italy has been left alone to deal with the virus. Europe’s reluctance to address Italy’s need for assistance has changed public opinion against the European Union. The reason for the lack of action by stronger countries such as France and Germany has been widely criticised by weaker countries such as Spain and Italy. EU officials have always spoken of multilateralism, obedience to EU principles and rules, and the cooperation and assistance of its members in decision-making. Yet they now face not only the Coronavirus crisis, but also a growing crisis of legitimacy and identity.

Although there is increasing dissatisfaction of the governments, and even the people, of Italy and Spain about the lack of support for unity in such a crisis, the roots of the EU crisis seem to be deeper than the present pandemic. It can be traced back to the critical economic relationship of northern European countries, such as Germany, the Netherlands, and France, and southern European countries, such as Italy and Spain that vividly reflects the economic divergence between the north and south. Consequently, the pandemic has intensified the issue, particularly after the opposition of the North in providing aid to the countries most affected by the virus. Although Germany believes that in such difficult circumstances, it should maintain its financial resources, Italy and Spain perceive this as a violation of the principles of the European Union.

Although European governments have so far allocated large sums of money to fight the Coronavirus, these figures are insufficient and Europe is on the brink of a serious crisis. It seems that the inability of the EU countries to reach an agreement on the adoption of a strong joint financial plan, in the face of an unprecedented health crisis, has caused great damage to the EU’s economy and to the legitimacy of the EU as an institution. Former European Commission President Jacques Dolour warned could even cause the economic death of the European Union, stressing that the conditions for state and government officials and the non-cooperation of European countries are two threatening factors.

In conclusion, the EU’s approach to the outbreak of Coronavirus will determine the EU’s credibility and usefulness. With the paucity of financial liquidity in the markets, and also with lack of support for one another among EU members in such a critical situation, the crisis is very worrying. The European Union is now plagued by economic disputes and injustices, especially due to the impact of the virus in Italy.However, the union has failed to reach an agreement to reduce the effects of the virus on the economy up to now, and the question for Europeans, led by Italy,  is that if Europe is only an integrated market in times of happiness, then its existence is unjustified.Adopting a more pessimistic view, the public outcry against the European Union in the UK should be taken a little more seriously. An Italian and Spanish exit could be the key to the collapse of the European Union.

Amin Bagheri is a member of the Iranian International Studies Association in Tehran. His research focuses on Iran and the Middle East.

This article is published under a Creative Commons Licence and may be republished with attribution.