Social Europe

  • YouTube
  • Podcast
  • eBooks
  • Newsletter
  • Membership

The future of Europe is being decided now

Sergio Fabbrini 3rd April 2020

Given the ravages of the coronavirus crisis, the future of Europe cannot be one of permanent division between its northern and southern states.

future of Europe
Sergio Fabbrini

We are going through the gravest European crisis since the integration project began. The divisions which emerged during the European Council on March 26th are unprecedented in the history of the European Union.

Faced with the devastation of the continent’s public health, the 27 heads of government of the EU member states decided not to decide. Pathetically, they asked their finance ministers to come up with a shared position in 15 days. A dramatic, but inevitable, choice—given the division between the northern countries (led by the Netherlands and including Germany) and the southern countries (led by Italy and Spain and including France) over how to deal with the pandemic.

In the run-up to the meeting, Yuval Noah Harari wrote that, given the challenge of Covid-19, ‘humankind is now facing a global crisis’. And he went on: ‘Perhaps the biggest crisis of our generation. The decisions people and governments take in the next few weeks will probably shape the world for years to come. They will shape not just our healthcare systems but also our economy, politics and culture.’ In Europe, those decisions will shape the very direction of the integration project.

Support on condition

For the northern countries, even when crises are symmetrical, such as that caused by Covid-19, every country must rely on its own resources—albeit this can include an increased deficit, following the suspension of the Stability and Growth Pact recently agreed by the Council of Economic and Financial Ministers. If a country needs further financial support, then there is the European Stability Mechanism (ESM), an intergovernmental treaty which can provide such support, to individual countries and on specific conditions. The country seeking help must show that its increased debt will be sustainable.

The Dutch finance minister, Wopke Hoekstra, claimed any support outside the conditionality of the EMS would entail ‘moral hazard’. The increase in debt would be punished by the finance markets, with a corresponding rise in the spread on that country’s public bonds. So, for the leaders of the northern countries, Italy, Spain or even France should use the ESM to obtain the funds to fight Covid-19 and its consequences—negotiating less restrictive conditions, if necessary, but fully accepting the intergovernmental logic of the ESM treaty.



Don't miss out on cutting-edge thinking.


Join tens of thousands of informed readers and stay ahead with our insightful content. It's free.



This position reflects a specific view of the EU and its future. For those leaders, the EU is (and should remain) an institutionalised confederation based on the principle that each state is sovereign. Of course, sovereignty is interpreted in a congenial way (for them). In fiscal policy, for instance, the moral-hazard concern is absent.

The Netherlands lies in third position, after Bermuda and Cayman, in the global fiscal paradises ranking for multinational corporations. As a tax haven, Holland allows multinational corporations to escape fiscal obligations towards the country where they are located. Fiat Chrysler moved to Amsterdam, saving 20-30 millions of euro annually due to the Italian state—money which would have been useful for improving the latter’s health services. The Netherlands has opposed any attempt by the commission to harmonise national fiscal rules in the EU single market.

Thus, for the leaders of the northern coalition, there cannot be European solidarity, beyond the rules celebrated by the treaties. It is surprising (considering its history) that this position has been adopted by the current German leadership. The confederal logic is magnified by the central role of the European Council, considered to be the only legitimate forum in which to take collegial decisions—or to decide not to take them (as Luuk van Middelaar has explained in his recent book, Alarums and Excursions).

The European Council takes unanimous decisions and if that is not possible, as happened on March 26th, then it is best to defer the decision (and it doesn’t matter if the house is burning). For these countries there is not a European interest which is distinct from the sum of the individual national interests. For the northern countries, therefore, Covid-19 is not enough to cast doubt on the status quo. But why should an Italy or a Spain or a France accept this view, subjecting itself in this dramatic situation to the conditionality of the ESM?

European response

For the southern countries, since Covid-19 has brought all of Europe to its knees, a European response—not just national responses—is essential to tackle it. As made clear in the letter sent on March 25th to the European Council’s president by nine governmental leaders (of Belgium, France, Greece, Ireland, Italy, Luxembourg, Portugal, Slovenia and Spain, representing more than half of the EU population and its gross domestic product), the attached resources should be targeted at the healthcare war, and its economic consequences, rather than financing the current spending of the affected countries.

Indeed, some of these countries (Italy foremost) should be blamed for continuing to have unjustifiably high public debt. Italy’s current governing majority has lacked even the basic courage to eliminate unnecessary spending, such as that incurred by the previous government in bringing forward a reform which anticipated the retirement age (the so-called Quota 100 reform).

That notwithstanding, the crisis caused by the coronavirus has nothing to do with the condition of these states’ public finances. Even with lower public debt, Italy would not have the resources to manage the economic and healthcare consequences of a crisis which is of ‘potentially biblical proportions’, as the former European Central Bank president, Mario Draghi, put it.

For the leaders of these countries, there is therefore a European interest—in healthcare, in economic recovery—distinct from that of the individual states. Solidarity comes from the need to deal with a common challenge, not from a generic declaration of principles. Hence the need to use supranational and not intergovernmental financial instruments. As the nine governmental leaders said, ‘we need to work on a common debt instrument issued by a European institution to raise funds on the market on the same basis and to the benefits of all Member States’.

Supranational instruments

European debt securities, for dealing exclusively with Covid-19’s consequences, issued by an EU institution (such as the commission) might be guaranteed by the ECB (as a supranational institution), through the recently established Pandemic Emergency Purchase Programme (PEPP). Jacob Funk Kirkegaard wrote on March 23rd that, with this programme, ‘the European Central Bank has brought the continent closer to political and financial unity than was previously imaginable’.

If northern opposition to this proposal persists, Wolfgang Munchau suggested on March 30th, the nine countries ‘could set up a mutualized bond backed by themselves, in a coalition of the willing. They could then challenge the European Central Bank to buy these securities as part of its PEPP.’ The activation of supranational instruments should then represent a step towards the creation of a fiscal capacity for the eurozone (not to be confused with current fiscal regulation or surveillance).

After all, how can we go on with a single monetary policy and 19 national fiscal policies? In unions of states which have become federal (such as the United States and Switzerland), that fiscal capacity is necessarily limited and conditioned. The US introduced it in the 1787 constitution (article I, section 8), to respond to a crisis which had threatened the previous Articles of Confederation of 1781. Direct and indirect taxes are subject to such limitations that federal spending remained below 5 per cent of GDP for almost a century and a half (with the exception of the civil war).

Supranational fiscal capacity does not take fiscal sovereignty away from the states but serves (as Alexander Hamilton put it) to respond with common resources to common problems. This is the supranational perspective for emerging out of crisis.

In short, in this battle there is no right or wrong but there are different visions of Europe. It is in everyone’s interest to find a compromise between confederal (intergovernmental) and supranational (federal) visions. That compromise should not however coincide with the status quo, given the latter’s empirical inability to deal with a devastating challenge such as that brought by the diffusion of the coronavirus. 

Exceptional situations require exceptional responses. The Conference on the Future of Europe has truly begun.

future of Europe
Sergio Fabbrini

Sergio Fabbrini is professor of political science and international relations, Intesa Sanpaolo chair on European governance and head of the political-science department at Luiss University in Rome.

Harvard University Press Advertisement

Social Europe Ad - Promoting European social policies

We need your help.

Support Social Europe for less than €5 per month and help keep our content freely accessible to everyone. Your support empowers independent publishing and drives the conversations that matter. Thank you very much!

Social Europe Membership

Click here to become a member

Most Recent Articles

u42198344ce 92c9 4f54 9a14 edee35fb9221 3 Europe’s Quest for Technological Sovereignty: A Feasible Path Amidst Global RivalriesChristian Reiner and Roman Stöllinger
u4219834670ab 1 Reclaiming Sutan Sjahrir: The Quiet Moral Core of Democratic Socialism in Southeast AsiaDeny Giovanno
u421983467 4b96 a2b4 d663613bf43e 0 A Fair Future?  How Equality Will Define Europe’s Next ChapterKate Pickett
u42198346742 445d 82f2 d4ae7bb125be 2 A Progressive Industrial Policy for the Global South: A Latin American PerspectiveJosé Miguel Ahumada and Fernando Sossdorf

Most Popular Articles

u4219834676 bcba 6b2b3e733ce2 1 The End of an Era: What’s Next After Globalisation?Apostolos Thomadakis
u4219834675 4ff1 998a 404323c89144 1 Why Progressive Governments Keep Failing — And How to Finally Win Back VotersMariana Mazzucato
09d21a9 The Future of Social Democracy: How the German SPD can Win AgainHenning Meyer
u421983462 041df6feef0a 3 Universities Under Siege: A Global Reckoning for Higher EducationManuel Muñiz

S&D Group in the European Parliament advertisement

Cohesion Policy

S&D Position Paper on Cohesion Policy post-2027: a resilient future for European territorial equity

Cohesion Policy aims to promote harmonious development and reduce economic, social and territorial disparities between the regions of the Union, and the backwardness of the least favoured regions with a particular focus on rural areas, areas affected by industrial transition and regions suffering from severe and permanent natural or demographic handicaps, such as outermost regions, regions with very low population density, islands, cross-border and mountain regions.

READ THE FULL POSITION PAPER HERE

ETUI advertisement

HESA Magazine Cover

With a comprehensive set of relevant indicators, presented in 85 graphs and tables, the 2025 Benchmarking Working Europe report examines how EU policies can reconcile economic, social and environmental goals to ensure long-term competitiveness. Considered a key reference, this publication is an invaluable resource for supporting European social dialogue.

DOWNLOAD HERE

Eurofound advertisement

Ageing workforce
The evolution of working conditions in Europe

This episode of Eurofound Talks examines the evolving landscape of European working conditions, situated at the nexus of profound technological transformation.

Mary McCaughey speaks with Barbara Gerstenberger, Eurofound's Head of Unit for Working Life, who leverages insights from the 35-year history of the European Working Conditions Survey (EWCS).

Listen to the episode for free. Also make sure to subscribe to Eurofound Talks so you don’t miss an episode!

LISTEN NOW

Foundation for European Progressive Studies Advertisement

Spring Issues

The Summer issue of The Progressive Post is out!


It is time to take action and to forge a path towards a Socialist renewal.


European Socialists struggle to balance their responsibilities with the need to take bold positions and actions in the face of many major crises, while far-right political parties are increasingly gaining ground. Against this background, we offer European progressive forces food for thought on projecting themselves into the future.


Among this issue’s highlights, we discuss the transformative power of European Social Democracy, examine the far right’s efforts to redesign education systems to serve its own political agenda and highlight the growing threat of anti-gender movements to LGBTIQ+ rights – among other pressing topics.

READ THE MAGAZINE

Hans Böckler Stiftung Advertisement

WSI Report

WSI Minimum Wage Report 2025

The trend towards significant nominal minimum wage increases is continuing this year. In view of falling inflation rates, this translates into a sizeable increase in purchasing power for minimum wage earners in most European countries. The background to this is the implementation of the European Minimum Wage Directive, which has led to a reorientation of minimum wage policy in many countries and is thus boosting the dynamics of minimum wages. Most EU countries are now following the reference values for adequate minimum wages enshrined in the directive, which are 60% of the median wage or 50 % of the average wage. However, for Germany, a structural increase is still necessary to make progress towards an adequate minimum wage.

DOWNLOAD HERE

Social Europe

Our Mission

Team

Article Submission

Advertisements

Membership

Social Europe Archives

Search Archives

Politics Archive

Economy Archive

Society Archive

Ecology Archive

Miscellaneous

RSS Feed

Legal Disclosure

Privacy Policy

Copyright

Social Europe ISSN 2628-7641

BlueskyXWhatsApp