Panel Participants:
Valdis Dombrovskis, Executive Vice–President of the European Commission
Dr. Vaira Vīķe- Freiberga, Former President of the Republic of Latvia
David M. Herszenhorn, Chief Brussels Correspondent, Politico
Ana Palacio, Former Minister of Foreign Affairs of Spain
Dr. Jana Puglierin, Senior Policy Fellow for the European Council on Foreign Relations, Head of the ECFRBerlin
Moderator:
Dr. Daunis Auers, Assoc. Prof. of Comparative Politics at the University of Latvia
The discussion began about the European Union’s institutional capacity to respond to crises. The first discussant emphasized that Europe needs a coordinating crisis center where information is centralized using newly available technologies. The discussant emphasized that the Covid-19 crisis has been a natural experiment, and European Union member state ministries should try to archive as much information related to the handling of the crisis for later study and analysis, to take better steps against crises in the future. Though this time members of the alliance were in need of medical equipment, in the future the needs will be different, and preparations must be made for each country to be ready. Such preparations should formalize capacity, establish it officially and permanently.
The next discussant highlighted how much the European Union has already done in the crisis. The Union immediately responded with flexibility in state aid rules to help provide jobs and support companies, as well as allowing to use existing EU financing more freely. Member states could receive financing from the European Union without national co-financing, drawing on a pool of EUR 540 billion for Covid measures, short term work coverage, SME support, employment creation, etc. The European Stability Mechanism has been mobilized to lend to sovereigns where and if necessary. Yet, these are short-term measures. The discussant pointed out that building resiliency requires a recovery that is inclusive, green, and digital – for this, a package of over EUR 1.8 trillion is devised for the next seven years.
The next discussant pointed out the role of the EU budget as a “magical instrument” allowing an entire block to coordinate, and that joint debt is already accentuating a will to respond to crises together going onwards. However, not all member states have the same capacity to respond fiscally. The south of Europe could not budget money very quickly, and the EU would be at serious risk if it leaves certain countries behind in times of crisis.
Another discussant joined in the critique to highlight that the solidarity clause contained in the treaty on functioning of the European Union has still not been invoked, posing the question of why it was not. Concurrently, crisis management structures already exist, but they failed at their task. The European Center for Disease Prevention and Control failed to be used according to its mandate, and if it did notify national governments, they failed to properly register the looming threats earlier in the year. Health remains a national competence, and European Union citizens are confused about why that is still the case, given the impact a medical crisis can have on the functioning of the internal market.
The Spanish example was brought up to highlight that 60 thousand people have died, there was 12% shrinkage of GDP and youth unemployment may reach 40% soon. Hence, the crisis will not only have short term impacts, but long term consequences which will affect all of Europe. The discussant also brought up the issue of absorption capacity – the ability to use European Union funds is becoming a higher problem. There are increasingly diminishing returns on the use of funds on infrastructure, more thought should be put into diverging it elsewhere.
A discussant agreed, emphasizing that strategic autonomy remains about more than doing things with or without the United States. It is also about having the capacity to handle issues locally, and much more discussion is needed to improve cohesion. Different conceptions of the notions holding the EU together can bring different problems, which should be ironed out as soon as possible. A discussant brought up the discussion for a European health union – states should consider giving more sovereignty for health issues to the wider Union for the benefit of everyone, perhaps naming an EU “health tzar” who could begin building familiarity with a federated European health network.
The discussion was finalized with agreement on opportunity in the strategic compass in building the resilience basket. The current instruments may not be up to the task, especially with the solidarity clause which come with fears of moral hazards and other stigma attached to that could lead to the bankruptcy of a state. Regardless, more discussion needs to be held for formalizing health centralization and other resiliency building efforts in the European Union.