The French and German proposal for a €500 billion coronavirus recovery fund is a bold and significant step toward a common European Union response to the pandemic that has devastated the continent. But it’s also only just that: a step.
If we are to overcome this crisis together, as a union of common interests and common values, much more needs to be done.
By dint of misfortune, Italy has the longest experience on the Continent in confronting the coronavirus. When the pandemic reached Europe, my country was hit the first and the hardest.
With none of our neighbors to look to for guidance, we had to craft a response to an unprecedented shock, constructing our strategy as we learned more about the virus. We acted resolutely, basing our actions on scientific evidence, and our experience has served as an example for the many other countries that were hit by the virus after us.
One of the most important lessons of the crisis is that this is a shock that is shaking not just health care systems, but also our economies and societies. It is upending deeply rooted habits, disrupting entire industries and forcing restrictions on personal liberties never seen in a democracy during peacetime.
It has quickly become clear that the economic cost of this pandemic is going to be as unprecedented as its impact to public health, putting in danger not just jobs and business in EU member countries but also threatening the fundamental pillars of our union, starting with the single market and the supply chains it facilitates.
By its nature, the coronavirus crisis is a symmetric shock, affecting all countries and regions, that cannot be effectively faced by individual countries alone. It did not take me long to be convinced of this, and I have been raising awareness among other European leaders about the urgent need for a coordinated economic response.
The risk has long been clear: Europe cannot afford to repeat the mistakes of the past by doing too little or reacting too slowly. Failure to act swiftly will result in a sharp widening of divergences among EU member countries.
Left unchecked, this crisis will jeopardize the entire European project, as our common market fails to keep up with other leading economic powers. The EU will suffer a severe blow, marginalizing our economic and political position in the world.
It was for this reason that I put forward a letter urging bold action on several fronts, including the protection of our strategic industries, the preservation of the single market and the construction of an ambitious European recovery fund, to be financed by common EU debt.
The letter was eventually signed by eight other EU countries (Belgium, France, Greece, Ireland, Luxembourg, Portugal, Slovenia and Spain) and sent to European Council President Charles Michel on the eve of the European Council meeting on March 26.
Europe has already achieved significant results: the suspension of the Stability and Growth Pact and of infringement procedures; an unprecedented monetary stimulus by the European Central Bank; and an important agreement on three new financial innovations, the European Commission’s SURE unemployment instrument, new guarantees for companies from the European Investment Bank, and a new credit line of the European Stability Mechanism.
The proposal announced last Monday in a joint press conference by French President Emmanuel Macron and German Chancellor Angela Merkel adds a piece that has so far been missing: an ambitious recovery fund. I welcome this proposal, which is very much in the spirit of our March letter.
The French and German proposal recognizes the importance of financing the recovery with a common European effort. It also acknowledges the necessity of taking full advantage of the EU’s borrowing capacity to give grants to member countries. And — finally — it clearly links the funds to the need to repair the damages inflicted on our economies by the pandemic.
It is important to note, however, that while this is a welcome step toward the European response we all need, more must still be done in two important areas.First, the amount of resources pulled together by all European instruments, including this recovery fund, falls short of the estimates of what many public and private institutions say will be needed to keep the economy afloat. The International Monetary Fund, for example, projects a fall in the eurozone’s GDP of 7.5 percentage points this year.
I therefore encourage the European Commission and its president, Ursula von der Leyen, to present in the coming days an ambitious proposal for the recovery fund and the next Multiannual Financial Framework in line with the needs and expectations of European citizens.
This is the only way to uphold the main political goals we all agreed upon for a greener, more competitive, more digital and more inclusive EU — an ambition reconfirmed by the European Parliament in a resolution adopted on May 15.
My second concern is that some EU countries are continuing to exert pressure for a “business-as-usual” European budget and a modest recovery fund, with a negligible share of grants. I am strongly convinced that their stance reflects a failure to understand the historic challenges we face.
We are not asking for generosity, but for awareness of the responsibility we have to the EU’s founding values and the well-being of our citizens, as well as the fundamental role the EU and its common market play in the success of all our economies.
Splits in the EU along north-south lines have always been wrong. Basing the response to the coronavirus policy on distorted stereotypes would be more misguided than ever.
Our economies are interlinked. Many countries — especially in the north — depend on this interconnectedness for large proportions of their GDP. A fragmentation of the single market would severely affect all EU countries, even the richest in the union.
In this time of unprecedented crisis, it is important to remember that no European economy will be able to recover on its own.