Date: 6th April 2020

Since its founding in the 1950s, the European club has by definition been a post-national project, or “supranational” in Brussels civil-servant jargon. Member states pledged to entwine their destinies in mutual solidarity. They even agreed to gradually surrender their national sovereignty for a shared identity in a United States of Europe. That’s the meaning of the “ever closer union” envisioned in the founding treaties.

Intra-European solidarity is strained by the pandemic, nationalism and uncoordinated taking of decisions. Germany, for example, caused outrage in Austria and Switzerland by stopping shipments of face masks to its neighbours. Several states have export restrictions, usually hidden in impenetrable legalese, on medical equipment. Italy, in particular, feels let down. When it first tried to invoke an EU mechanism to share medical supplies, no member state helped. Ironically, only China sent equipment.

Discussion surrounding the aptly called coronabonds, through which the euro area would raise new debt, will further put European solidarity to the test.  ".  The 19 members of the currency union would be jointly and severally liable for these bonds through which countries such as Italy and Spain, which are suffering the most from the coronavirus, would get cheaper access to the money they need to recover. States like Germany, which currently borrow at negative rates, would pay only trivially higher interest costs. What better way to finally show European solidarity?

As it stands, only nine members of the euro area support coronabonds. That leaves 10 unconvinced. Germany is among them, of course. The bluntest rejection has come from the Dutch.

For the Union to survive during these times of turmoil, it now requires full banking, capital-markets and fiscal unions.


Sources here & here  (By Andreas Kluth)