Just yesterday, the EU's President of the European Research Council, Mauro Ferrari, resigned over the EU's failure to act on his advice to set up a large scale, EU wide programme to combat COVID-19. Professor Ferrari only began the role at the turn of the year and submitted his resignation to the President of the EU Commission, Ursula von der Leyen with immediate effect.
In his letter of resignation to the EU's top woman, the nanoscientist spoke of how the EU's response to the outbreak of Coronavirus was "extremely disappointing" and how his support for the EU has diminished, going on to say "I arrived at the ERC a fervent supporter of the EU but the COVID-19 crisis completely changed my views, through the ideals of international collaboration I continue to support with enthusiasm" and I think we can all understand why Prof. Ferrari feels that way. He thought when the virus first hit the continent that scientists would lead the way with new vaccines and research rather than politicians in the EU supporting a top down approach led by EU leaders. Ferrari, in his resignation statement, went on to criticise the layered approach of bureaucracy that is operated by the EU and the plans and response package he had initially proposed to the Commission President had "disintegrated upon impact" when funnelling down and through the levels of bureaucracy.
Furthermore, Ferrari lambasted the "complete lack of co-ordination of health care policies among member states" which just goes to prove that integration of European nations does not work unless everything is the same, from health policy to fiscal policy to monetary policy – that would subsequently create a United States of Europe.
Not only that, it isn't just the EU's own who are critical of their response to the virus, various Italian politicians feel that the EU is doing less than usual in helping the situation where the virus is rife. Former Italian MEP and Deputy Prime Minister Matteo Salvini hit out at the EU when he felt that the Commission were doing more to help Russia combat the virus than one of their own member states. Speaking to the Italian Senate, Mr Salvini said "In Brussels, it is clear they are yet to understand the situation. If the German Government keeps talking about the European Stability Mechanism (ESM) without conditions which provides that funds are given to Italy but have to be paid back in the future, Berlin and Brussels got it wrong."
This now brings us to the subject of Brexit, these funds which have been provided to Rome by the ECB via the ESM will be footed by member states and with the second biggest contributor to the EU, Britain, now leaving the EU, one struggles to see how they can afford it. This may spell the beginning of the end for the European project as Italy becomes more Eurosceptic by the minute, especially after harsh austerity measures imposed on them and Greece by Brussels and now this, the failure to help a member state during this global crisis. Thankfully, Britain is out of the EU and we won't be hit by the what will be gigantic bailout package to Italy, however, we do have to feel sorry for our Italian cousins, they are essentially subservient to the EU and unless they choose to leave they may be under harsh economic restrictions for a very long time.
In addition to this, Salvini has more recently called on the Prime Minister Giuseppe Conte to reject EU loans, arguing, rather convincingly, that it will leave Italy in an even deeper recession and possibly even a depression once this is over with. It would leave Italy with unmanageable debt and trapped in the EU with debt that they cannot even think about repaying, this would have unprecedented knock on effects for the economic picture in southern Europe especially but would also hit the rest of the EU hard as it will mean more borrowing by the ECB and more contributions which I don't think many nations will be happy about at this economic uncertain time. The bottom line is that Germany cannot afford to keep bailing out economies and crisis' like this highlight the negatives of a single currency, mismatching versatile economies into one centralised financial system. Berlin have their own economy and future to worry about as COVID-19 has hit every economy hard, on a level only comparable to the Financial Crash in 2008 and the Great Depression in the 1930s, the Germans cannot start thinking about other economies until they sort their own out and with little economic growth over the last few quarters it isn't looking good for Chancellor Merkel.
Following the 2008 financial crisis Greece came very close to either defaulting on its debt or having to leave the Euro because the ECB could not really help it. This time round the same problem will be faced not only by Greece but by Italy, Spain, France and almost certainly other member states as well. The Coronavirus will not cause a sovereign debt crisis in the US, the UK or Japan but there will be multiple sovereign debt crisis in the Eurozone later this year and/or in 2021 at the latest.
The thing is, the ECB is not a genuine central bank; it does not own the debt of one sovereign state, but the debts of 19 different ones. The debt levels and the complexion of the economies of its various members are so different that it is impossible for the ECB to act in a manner which would be equitable. In its endeavour to prop up the weaker economies in the zone it has (reluctantly) bought a large amount of their debt. Any form of debt forgiveness, which would, in any event, be prohibited under EU treaties, for Greece, Italy, Spain and France (all countries which are desperately in need of help) would therefore be at the expense of Germany, the Netherlands and other richer states. It is also for this reason that these richer economies have refused to allow the ECB to issue mutualised COVID-19 bonds backed by all member states.
The solutions are coming from the nation states, the only institutions that can act quickly enough and have the moral and legal authority to take tough actions that are required such as shutting borders, itself a thorough repudiation of the EU ideal of a borderless Europe. The folly of the EU's approach is now in plain sight for all.
With thanks also to Ben Habib for his contributions to the latter part of the article.
References
https://www.ft.com/content/f94725c8-e038-4841-a5f6-2e046ae78e95
