It is the pandemic and its evolution that now determines economic and social developments in the EU. This is because there has been a chain of EU failures and omissions that have turned the difficult into more difficult ones, potentially losing out in the first half of 2021 in terms of the growth of the euro area economy and given that will be an absence of a third and fourth wave of the pandemic.
by Thanos S. Chonthrogiannis
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The EU’s mistakes and omissions
- The first mistake made by the Commission-EU and the leaders of its member countries is that they have underestimated the strategic importance of tackling the pandemic.
At first, they thought it was solely a China problem alone, while they expected the Chinese people to rebel against China’s regime because of the lack of transparency, information, and democratic control respectively in China.
In practice, however, China’s leadership has paid due attention to the strategic importance of a pandemic in society, which is why it has taken extreme and effective measures to control it. On the other side, the Commission-EU was very relaxed and did not understand the strategic and geopolitical importance of successfully tackling a pandemic.
Based on official statistics, Thursday October 22, 2020 China reported zero deaths from Covid-19 and no new cases. On the same day in the EU, Spain announced 1000000 cases and a three-digit number of deaths, Germany 11200 new cases per day, etc.
The Chinese economy will grow at an annual rate of 4.9% in Q32020, while the EU and its member countries as well as the US are in a deep recession. The fact that China will have growth in 2020 while the EU and the US will be struggling with the recession gives China an economic and geopolitical lead.
This finding highlights China’s global role and strengthens its global geopolitical position. Essentially, the successful or non-successful treatment of the Covid-19 pandemic acts as a catalyst for international geopolitical developments and reclassifications, respectively.
- The second mistake made by the Commission-EU and the leaders of its member countries was the adoption of only the optimistic scenario for the evolution of the pandemic.
This optimistic scenario led to the adoption of the view that such measures are not immediately needed as China has done to avoid harsh measures that would cause popular discontent and political costs and that by autumn 2020 the vaccine for Covid-19 will have been found.
Fear of political costs led to the adoption of the optimistic scenario, with the result that the EU and its population remain uncovered until 2022 when the first vaccine is to be produced.
- The third mistake made by the Commission-EU and its member countries’ leaders is that they have degraded and continue to degrade the EU institution and their functioning.
On the other hand, Europeans mocked current US President Donald Trump for not respecting his country’s institutions and international counterparts during his presidency.
Instead of emphasizing the institutional upgrading of the EU, transnational cooperation has been strengthened, with member countries attributing – their own mistakes and omissions – to the European institutions and the Commission.
Given the choice of governments that transnational cooperation is more effective than European institutional cooperation, it creates an increase in Euroscepticism among EU citizens and given that the continued development of transnational cooperation is detrimental to the European institutions.
- The fourth mistake made by the Commission-EU’s fourth is that the pandemic has shown that there is no common health policy throughout the EU, which makes it difficult to deal with Covid-19 in a coordinated way.
However, the problem of the lack of a common policy and coordination has not been done in the right direction. Many member countries do not want to make commitments on health issues, because this would require disbursement of huge sizes of financial resources from the annual state budgets of the member countries.
The correct policy would be to have a new coordinating body on health issues for the elaboration and implementation of a common health policy and a multiplication of health funds from the European budget.
Each EU member country, in the absence of joint coordination, implements its own policy, dictated by the WHO (World Health Organisation), without regard to any joint effort and possible consequences of its choices for the other member countries.
- The fifth mistake made by the Commission-EU and of strategic importance is the non-financing of the response to the pandemic during 2020.
The financing funds secured and made available to the member countries are due to the ECB. But on the other hand, there are no free financial aid, which will come in 2021.
The problem is because since there is no additional financial aid at European level for 2020, all policies take place at member country level.
In this case, however, member countries with great economic and budgetary potential, e.g. Germany, the Netherlands, can strongly support their economies in recession, while member countries of the Southern Eurozone do not have these possibilities.
The nightmare on the road to giant budget spending
All these mistakes of the Commission-EU to date lead to the conclusion that in the first half of 2021 the EU economy will also be moving at deep recessionary levels without ignoring the fact that a third wave of Covid-19 in April 2021 will put the EU economy in recession for the whole of 2021.
In order to cope with the unemployment caused by the deep and prolonged recession, EU member countries will have to relax budgetary rules very much and lend large sums that will affect both the budget deficit in their annual government budgets and the debt levels of their member countries general governments.
Public spending will soar to an extremely high level and with all that it entails. The EU has entered a new phase of over-indebtedness. The ECB’s so-called “quantitative easing” ensures low borrowing rates so that member countries can help manage their public debt despite its drastic increase.
We would suggest that new initiatives be taken to tackle the pandemic in a common and coordinated way to better deal with the third and possibly the fourth wave of it and its consequences, while at the same time preparing the EU-Commission to deal with the future geopolitical downgrades it will experience from China and the US.
