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Setting the EU Up to Fail

Integrationists raise unreasonable expectations and then blame the EU when it fails to meet them.

Paolo Gentiloni Mariano Rajoy Emmanuel Macron Angela Merkel Mark Rutte
Paolo Gentiloni, Mariano Rajoy, Emmanuel Macron, Angela Merkel and Mark Rutte, the leaders of Italy, Spain, France, Germany and the Netherlands, deliver a joint news conference in Berlin, June 29, 2017 (La Moncloa)

First coronavirus itself was going to kill the EU. Now we are told the bloc’s fate was sealed in the first weeks of the outbreak, when creditworthy nations in the north refused to pool their debts with crisis-struck Italy and Spain.

Ulrich Speck, one of Germany’s top foreign-policy analysts, cautioned against jumping to conclusions:

With the corona crisis we see the return of a slightly hysterical discourse about the EU: if X, Y and Z do not immediately happen, the EU will be dead. We should have learned during the crises of the last years that the EU rests on quite solid foundations.

Not everyone has.

Marshall Plan

Getting 27 governments on the same page is challenging under the best of circumstances, yet it took the EU’s institutions and member states only a few weeks to agree a rescue package worth ten times the Marshall Plan (adjusted for inflation) Spanish prime minister Pedro Sánchez called for.

And that’s just the beginning. The European Commission has proposed using its 2021-27 budget as a vehicle to fuel the post-coronavirus recovery. The European Council is debating a $1 trillion recovery fund. Spain has called for €1.5 trillion. German chancellor Angela Merkel has opened the door to joint debt issuance, as long as it is temporary and managed by the European Commission. Debt and deficit rules, which were the obsession of the last crisis, have been suspended without controversy. So have restrictions on state aid for businesses.

All this comes on top of national efforts. Germany is planning to borrow €156 billion this year and setting up a €600 billion rescue fund for its companies. Spain has a €200 billion rescue plan, worth one-fifth of its annual economic output, €117 billion of which is public money.

The only thing Austria, Finland, Germany and the Netherlands cannot accept is eurobonds, issued jointly by the eurozone’s nineteen member states. That could lead to “transfer union”: the permanent subsidization of the south by the north.

(The Czechs, Danes and Swedes would object as well if the plan was to pool debts at the EU level. They are not in the euro.)

For this, the EU’s survival is said to be at stake.


It’s not just the usual three horsemen of the EU’s apocalypse — the British tabloid press, conservatives in the United States and Russian bots — who are predicting the union’s demise. Pro-European economists, political scientists, researchers, think tankers, former Greek finance ministers and random twitterers have joined in, blaming not the EU’s response to the pandemic per se but the “framing” and “optics” of it.

The outrage is selective, though. Northern leaders who reiterated their views on eurobonds are blamed. Southern leaders who reiterated their views on eurobonds are not.

Merkel and Dutch prime minister Mark Rutte didn’t choose this moment to debate eurobonds. Giuseppe Conte, Emmanuel Macron and Sánchez did — by arguing now was the time for a policy they favored all along, and if Northern Europe didn’t give in it would bring down the EU.

Talk about poor framing. Conte, Macron and Sánchez could have known — should have known — that eurobonds were a bridge too far. They couldn’t balance their budgets even when times were good, but now they expected more frugal nations to risk higher borrowing costs of their own in order to reduce the cost of deficit spending in the south?

By turning such a divisive proposal into the test of European solidarity, the three leaders set the EU up to fail.

Moving the goalposts

There is genuine European solidarity. Taxpayers in the north are once again called on to support weaker states in the south, who have suffered the worst of the coronavirus pandemic, and many are willing to. Only 30 percent of the Dutch and 17 percent of Germans believe their governments have been too generous. (And only 7 and 8 percent, respectively, believe they have been too stingy.)

But, just like during the euro crisis — when Rutte went so far as to break an election promise in order to approve a second bailout for Greece — the elite consensus is that wealthy northerners aren’t doing their fair share.

The goalposts are constantly shifting. First the problem was that Europe didn’t bail out Greece. When it did, the problem was that it didn’t have a permanent bailout fund. When it created one, the problem was that the fund wasn’t big enough. When it expanded the fund, the problem was that it didn’t have eurobonds. It never ends.

Claus Vistesen, an economist, jokes that the EU could have a nuclear umbrella, ten aircraft carriers, a direct monthly solidarity transfer from Bavaria to Palermo and a €10 train ticket from Helsinki to Malaga, and it would still be a disappointment to the consensus.

No wonder so many Europeans are under the impression the EU is ineffective.


Instead of comparing the EU to an idealized version of itself, we should compare it to the likely alternative.

Had this pandemic happened a hundred years ago, every nation would have had to fend for itself. We know, because that’s what happened in 1918.

The World Health Organization is doing what it can with limited resources, and many countries are taking its recommendations seriously, but it doesn’t have the power to enforce anything.

Other supranational organizations, from the Association of Southeast Asian Nations to the Russian-led Eurasian Economic Union — all of which were hailed as “the next EU” at some point — are conspicuous by their absence.

Even the United States, which, unlike the EU, really is a federation, can’t distribute stimulus money fairly or send out unemployment cheques, yet the European Investment Bank and the European Commission are expected to do something similar. In the case of the latter, create a €100-billion EU-wide short-time work program, called SURE, from scratch.

We assume they will figure out how to get the money where it needs to go, and they probably will. EU institutions are run by competent bureaucrats.

Such innovations and successes are taken for granted, but anything short of a United States of Europe is all too often reported as a failure.