Shortly after winning the election of 2017, French President Emmanuel Macron declared in his discourse at La Sorbonne, “the Europe of today is too weak, too slow, too inefficient, but Europe alone can enable us to take action in the world, in the face of the big contemporary challenges.” Explicitly, underlying standards of European governance, which consisted of too much diplomatic Europe and not enough political Europe, were at stake. In today’s time of crisis, these reflexes are even more hazardous. We are witnessing an unprecedented moment where our highly integrated societies are being forever changed by the COVID-19 pandemic, whose propagation speed and magnitude are incomparable to previous health disasters. Facing such a global outbreak is a stress test for the world in general and for Europe’s sustainability in particular.
Modern Europe has been structurally divided by its history and its constitution, as well as by the consciousness of the collective narratives that have shaped the individual nations and their identities. As Milan Kundera described it, Europe has always been divided into pieces: From the fifth century A.D. where the West was “turned towards the ancient Rome and catholic Church” and the East was “rooted in Byzantium and orthodox Church” to after 1945 where liberal democracy together with capitalism spread to the West while communism spread to the East, European culture is impregnated with tensions.
Even so, the people of Europe collectively decided 70 years ago to join common strengths. They were driven by the simple idea that being stronger together would be a sine qua non condition to remain an important power by the end of the century. To overcome cultural and geographic fractures, Europe was built on values of democracy, individual freedom, a social market economy and progress for the middle classes. These values, however, have been jeopardized by consecutive breaches and are being increasingly challenged by populisms of all kinds.
In 2008 and 2011, middle classes’ vulnerability increased as the result of consecutive financial and debt crises: The long-term policy mix adopted back then was not appropriate for an environment of low or near-zero interest rates. Savings were growing, preventing cash from circulating in Europe, where it could have been allocated to the priorities of the European agenda. As a result, while China invested massively on its digital economy, and while the U.S. increased public spending in key sectors of sovereignty like technology and defense, Europe mainly observed a contraction in public and private funding.
Concretely, according to E.U.-level statistics, venture capital funds invested about €6.5 billion in the E.U. in 2016, while up to €39.4 billion was invested in the U.S. In 2015, executive leaders failed to properly manage the refugee crisis: Europe was unable to coordinate a political answer to help countries at the forefront of the humanitarian disaster like Greece or Italy. By leaving these countries on their own, Europe failed to accord with its basic values of respect for human dignity. As a result, ideologies like nationalism, protectionism and selfishness surged.
One can observe today how tempting it is to perpetually reuse these old ideologies as simplistic building bricks to design the post-pandemic world. I believe that the timing is perfect for Europe to prove it is learning by doing while taking resolute action to fight the coronavirus. In the past couple of weeks, three phases could have been observed, with political frictions between each transition: First, a spontaneous reflex of isolation and withdrawal; second, a short-term phase of cooperation to address the urgency; and eventually, a call for a renewed thinking of the European idea that has to drastically reinforce its political project.
The initial lack of foresight of most leaders reminded us that we no longer had memories of health disaster management. Uncoordinated action leaves room for national withdrawal. The blocking of exports of health equipment to Italy, the decision of the European Central Bank not to intervene on the interest rate spreads and the unilateral ability of the Hungarian government to get rid of basic democratic principles to reinforce its illiberal executive power embodied all of Europe’s old reflexes. As Luuk Van Middelaar puts it in his book “Alarums and Excursions,” European institutions have historically been poorly designed to ensure that necessary improvised and innovative solutions will take over from the rule factory that usually prevails. Europe’s initial response to COVID-19 is no exception to this rule.
The second reflex, however, has been more positive. A more scalable package of economic measures was adopted by the European Commission to support emergency and recovery plans. Concretely, it will allocate up to €38 billion ($41.3 billion, corresponding to 2% of Italy’s GDP) to prop up the Italian healthcare system, without any conditions on its future public policies. Countries that don’t have efficient unemployment insurance will be able to tap into a €100 billion (about $108.7 billion) fund. Moreover, a new flexible framework on state aid rules will provide immediate liquidity to European citizens and companies. Most of the response in the Eurozone was executed with some degree of innovation and liberty regarding basic European rules that normally prevails. While treaties normally prohibit state aid, every E.U. member state offered financial support to its businesses, creating at the same time a distortion of competition between them within the global market: Due to the lack of economic convergence in the Eurozone, the interest rate spread between countries increases during the pandemic and consequently distorted the conditions of fair competition in the single market. Indeed, countries are unable to support their businesses in a comparable manner as they cannot finance themselves on capital markets in a similar way. Normally, Europe cannot issue bonds: Each member state issues its own bonds, leading to large investment capacity disparities among countries. Using the crisis as an opportunity, the Eurozone agreed on an unconditional €500 billion fund, which may pave the path to future debt mutualization — it would endorse this new solidarity measure and, by doing so, partially overcome old legitimate concerns on moral hazard.
In the longer term, the crisis is also emphasizing the technological dependence of the European Union on foreign powers that might not share the same concerns on privacy, transparency or accountability. Peer-to-peer coronavirus tracking via Bluetooth protocols associated with privacy enhancement technologies (PETs) are now considered crucial elements of the toolbox to stop the lockdown and to get the economy back on track, and Europe does not yet have the industrial power to develop its technology as efficiently as the pooled efforts of Google and Apple. As critical political decisions are increasingly enlightened with scientific expertise, this pandemic illustrates how valuable multilateral initiatives between government executives, international organizations, corporations and NGOs will be. The Stanford Center for Human-Centered AI’s call for a National Research Cloud might become an emblematic example: It aims at gathering academia, government and industry to make computational resources available and interoperable between those actors in order to process the massive amount of information our digitized world is now capable of producing.
Fostering technological progress that focuses on people, sustainable innovation and fundamental research is the best way to address our increasingly complex world. These challenges are mobilizing collective intelligence and political will. Although the new leadership of the European Commission communicated its ambition to proactively prepare the next wave of industrial data together with 5G, the COVID-19 blast will likely prompt it to set an even tighter agenda for its digital sovereignty.
Like every shock, the COVID-19 pandemic comes with its novelties, uncertainties and opportunities. Renewing Europe is possible under some conditions: First, that the E.U. does not compromise on solidarity while resolving the health crisis — solidarity among member states, but also solidarity with emerging and most vulnerable African countries. Second, that Europe promotes better integration toward economic convergence. Third, that it values long-term sustainability and cooperation with its partners like the United States and China. And finally, that it takes care of the youth through education as a way to achieve individual emancipation. That might be a vaccine for Europe.
Contact Victor Storchan at storchan ‘at’ alumni.stanford.edu.
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