Socialist Worker

Coronavirus crisis exposes the myth of a progressive EU

by Alex Callinicos
Issue No. 2698

German chancellor Angela Merkel is no leader of the free world

German chancellor Angela Merkel is no leader of the 'free world' (Pic: GovernmentZA/Flickr)


The coronavirus crisis has exposed political leaders as wanting. The systematic bungling by Boris Johnson’s government is summed up by the fact that he, his health secretary and the chief medical adviser have all tested positive for the virus.

Donald Trump’s brutish ignorance and scapegoating politics is exceeded only in callous incompetence by his Brazilian twin Jair Bolsonaro. But these clown kings of contemporary right wing politics shouldn’t draw attention away from the dreadful performance of more mainstream neoliberal institutions.

When Trump captured the White House, the European Union (EU) deluded itself that it might fill the gap. Its dominant political figure, German chancellor Angela Merkel, was portrayed the “real leader of the free world”. But yet again the Covid-19 pandemic has exposed the EU too.

The EU supposedly seeks an “ever closer union” culminating in a federal European state comparable to the US.

But although it has some transnational institutions, notably the European Central Bank and the European Commission, it remains a cartel of capitalist nation states. In this the more powerful, above all Germany and France, call the shots.

Because of this, the EU’s fumbling of the pandemic has followed exactly the same path as it took during the global financial crisis.

First, national governments make the immediate emergency response. They have considerably more resources and legitimacy than EU institutions, so they decide the lockdowns. This means the response has been piecemeal and uneven. Both Sweden and the Netherlands have avoided full lockdowns and are pursuing versions of Johnson’s discredited “herd immunity” strategy.

Worse still, it’s every state for itself. Early in March Italy appealed for international help. There was no response from the rest of the EU. Only China offered medical supplies and expertise. There is an unconfirmed story that some of these supplies were seized en route westwards by the Czech Republic. So much for the “European solidarity” the EU likes to boast about.

Uncertainty

Secondly, there is the economic policy response. There seems to be a consensus among economists that we are heading for an economic contraction more severe than the Great Recession of 2008-9.

Nouriel Roubini, one of the few to predict the global financial crisis, is warning of a “Greater Depression” worse even than that in the 1930s. The main uncertainty concerns how long this catastrophe will last.

This is why governments are throwing as much money as they can at their economies. Tory chancellor Rishi Sunak has so far unveiled four successive emergency packages.

They may lead to a budget deficit, where some spending has to be covered by borrowing, of £200 billion in the next financial year. That compares to £25.5 billion in 2018-19.

Germany’s coalition government has introduced a supplementary budget of over £318 billion, the equivalent of 10 percent of national income. Germany has given itself the right to ignore its own economically illiterate “black zero” rule banning budget deficits, which it imposed on the Eurozone.

Meanwhile Italy and other weaker member states have their hands tied by measures such as the 2012 Fiscal Pact.

This gives the European Commission the power to police national budgets and limit government borrowing. It is the ugly legacy of the Eurozone crisis, when austerity was forced on Greece, Ireland, Spain, and Portugal.

There was the same line-up at last week’s European Council—the supreme EU decision-making body. An alliance of mainly southern states advocated the introduction of “coronabonds” that would allow joint borrowing by EU governments.

This was blocked by the so-called “Hanseatic League” of prosperous northern member states backed by Merkel.

Once again the neoliberal cult of sound money has triumphed in an economic emergency. No wonder Yanis Varoufakis, the left wing former finance minister of Greece, reacted, “I don’t think the EU is capable of doing anything to us other than harm.

“I opposed Brexit but I have now reached the conclusion that the British did the right thing, even if they did it for the wrong reason.”


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