Last week, nine EU member states issued a joined
letter to the EU Council President Charles Michel, calling for the issuance of
a joined European debt mechanism, or the “corona-bonds “as they are named.
These countries include Italy, Spain and France, who
are among the worse hit by the COVID-19 outbreak, together with Greece,
Ireland, Portugal, Belgium, Slovenia and Luxembourg.
The call was made as these nations are struggling with
the spread of the virus, plus its economic consequences and anticipated outcome.
The notion was once again rejected by the “frugal” states of the north, notably
Germany and the Netherlands, plus their allies.
As expected, the EU has found itself in another unity
test and identity angst. The Portuguese Prime Minister lashed out at the Dutch
Minister of Finance over comments he made, suggesting that Brussels should investigate
countries like Spain, for not having a budgetary margin to fight the pandemic.
It
is evident that the EU cannot and should not continue like this. If the “frugal”
states mistrust the southern ones that much, then there is absolutely no reason
to remain in the same union.
All
peripheral economies, with the insistence of Germany, had to go through brutal
reforms, humiliating austerity with massive unemployment, social and economic
dismantlement, even loss of life ten years ago; suicides skyrocketed in Greece,
the poster-child of the euro-zone economic crisis.
So,
for now to have Netherlands, pointing the finger once again towards Spain is
simply unacceptable and disrespectful. The peripheral countries did what they were
expected to do, they fixed their banking sector, dealt with their debt,
modernized their economies, sold out their national assets and even endured the
humiliation of belonging to the “PIGS” group during the last crisis.
What
excuse does the Netherlands now have to ask for more? None really, apart from
acting like an egotistical, self-serving party. It is great to be one of Europe’s
tax havens, either within its European land borders, or via its overseas
territories, gaining unfair advantage against its fellow Europeans, yet then
accuse them of being corrupt and lazy, worthy of never-ending supervision,
while themselves as a nation refuse to abandon their own practices.
Greece
for example used to have its own thriving industry, only to see it relocate to
other developing nations due to globalization or be bought from bigger European
multinationals, eventually becoming sold or closed off. Many Greek companies
relocated to Benelux countries, in order to obtain tax relief there.
Our
farmers must bury their crops, so that Greece can buy the same goods from
countries like Turkey or Egypt. All due to EU trade deals and agreements. So
why then the “frugal” states object when we get compensation for the policies
they pushed, due to their stronger influence in the EU? Perhaps they would like
to relocate some of their factories back to us, so we can regain some of our
jobs lost and keep our workers here, instead of them going and “stealing their
jobs”.
In
addition, the question of “Euro-bonds” is not new. It was brought up ten years
ago and it was rejected again by Germany and the Netherlands. Sadly, then it
was Greece alone who was crying out for them, as a help to deal with the
economic crisis. But Spain’s conservative government did not side with Greece,
so perhaps now they get to taste the consequences.
The Euro-bonds are a necessity. If the euro-zone remains
a currency union only, countries like Spain, Portugal and Greece will always be
at disadvantage. Germany might insist on ESM, however that does not solve the
problem, but only brushing its surface, until the next crisis comes.
It suits the Germans, as after accumulating most of
the wealth, all they must do is spare a fraction of it via ESM, plus maintain
the image of the savior of Europe. Obviously, the Germans and the Dutch are
reluctant to share their wealth.
But unfortunately, then they should follow the British
out of the EU. They cannot have their cake and eat it. The euro was modeled
after the German mark; thus, it is more compatible to the German economy and those
with a similar one.
The weaker euro-zone nations are unable to devalue
their currency in order to stimulate their economy, plus they must also overspend
in order to keep up and share the same currency with the much stronger economic
powerhouse that is Germany.
If we examine how they are forced to overspend, we
will find out that usually it is by buying luxury goods such as cars and
military equipment, from Germany itself. In this way, they are helping to
sustain its economy and empower it even further. The situation goes in circles
and it is unworkable.
The only way forward, is if we either proceed in making
Europe a more federal entity or listen to the Euro-skeptics and revert to a trade
block. The Germans must make up their mind of what type of Europe they want and
stop holding everyone else as hostages, to a project that mainly benefits
themselves.
The United States, Brazil, Russia, India and other
federal states, have a more harmonized fiscal policy, although indeed some of
their states or regions are more affluent. That does not stop them from transferring
wealth or sharing debt, since they share a single currency and thus, they abide
to a more centralized fiscal policy.
In Europe on the other hand we opted for maintaining
our national governments and grant them with most decision-making powers, so
that they opt-out or block any policy they do not agree with, even if this comes
to the detriment of the overall EU itself.
It is time for all of us to rethink of what kind of Europe
do we want and our role in it. It is unacceptable for a handful rich nations to
opt for all the benefits, while rejecting the responsibilities that come with
EU membership. It is even more outrageous, when they scapegoat their fellow
member states, in order to excuse their stance to their voters.
Something that worked many times before, when European
governments were branding their colonial subjects as savages, other cultures as
inferior and their ethnic minorities as the enemy from within, worthy to be
managed and ruled because they were unable to do it by themselves, or even be exterminated.
As the Portuguese Prime Minister stated out already,
the COVID-19 outbreak is not of the southern nations’ making and it affects all
countries in Europe, as it will ultimately have an impact on the collective
European economy. To deal with it, we will need finally to show solidarity,
otherwise start thinking about our mutual divorce, whether this is the dismantling
of the euro-zone, or the EU itself.
The British perhaps foresaw this and did well to
abandon ship early. The Danes too decided to opt out from the euro and the
Swedes, although obliged to join by their Treaty of Accession in 1994, have
also managed to stay out of it.
The eastern and central new EU entries have mixed
reactions to their membership, with Poland going from one of the most
enthusiastic members, to one of the more Euro-skeptic. Together with the Czechs
and the Hungarians, they are staunchly opposing their euro membership and perhaps
they too, are wise.
If all they see from how the euro-zone is managed, why
would they want to join and be scorned by arrogant Dutch ministers, or have
their fiscal policies dictated by another EU member state?
If we are to continue with our “European dream,” we
must make up our minds and either give EU institutions full authority and
capacity to decide our collective future, or since we are so fond of our
national governments, keep them and accept the consequences.