€ 540 billion, painfully agreed, will not suffice.

One would wish to commend the agreement, reached by Finance Ministers after more than 20 hours of wrangling, as the first step towards the Union’s coordinated response to this major crisis which will endure long past dealing with the Covid19 pandemic. It offers, however, only a breathing space before addressing the existential questions which will determine the survival of the Union itself. Resorting – once again – to the perennial “compromise” does not bode well for the future because the very premise of the accord – which sought to overcome irreconcilable positions – has firmly closed doors that make future negotiations far more difficult.

The fundamental mistake lies with the European Council which, unable to reach a consensus, discharged its responsibilities onto their Finance Ministers, mandating them to make proposals for the package of measures that the Union should deploy in favour of its Members. In so doing, they limited the field of responses to the economic and financial aspects despite the fact that – contrary to previous crisis – the challenges extend far beyond this narrow framework to encompass sanitary, social, environmental and above all “political” considerations that need to be taken into account.

Mandating the Finance Ministers was de facto limiting the discussion to dealing with the vexed question surrounding the mutualization of the risks embedded in the financial package. This led to a hybrid solution in which the pillar to be managed by the Commission (SURE) would benefit from an EU budget guarantee (and was therefore mutualized according to the treaty, independently of the façade of guarantees provided by the MS) while the second pillar, entrusted to the EIB, was mutualized in accordance with its by-laws (the 27 MS shareholders having undertaken to maintain at all times a minimum debt/equity ratio). It follows that debt securities issued by both entities constitute perfect “Eurobonds” with which the market has been familiar for decades (including previous issuance by the European Community, ECSC and EURATOM). On the other hand, the € 240 billion to be financed by the EMS are restricted to – and guaranteed by – EMU members, amounts being limited to 2% of the final borrowers’ GNP with proceeds to be used only for the direct and indirect fallout of the pandemic.

Covid19 has been the unforeseen indicator and unwelcome accelerator of the need to address the fundamental problems that have been undermining for years the progress of European integration. It has brought forward the demonstration of the indisputable added value of the Union and – a contrario – the manifest incapacity that the Member States would face in addressing individually the forthcoming economic crisis or the repetition of a similar sanitary urgency. Thus is appearing the absolute necessity to endow the Union with new competencies in the sanitary and health fields, (previously a jealously guarded prerogative of the MS), in order to establish strategic inventories or production capacities of drugs and medical equipment; the cost of imposing the alternative of individual “national sovereignty” in this field would prove manifestly prohibitive.

The same reasoning has often been applied in the past, to little effect, to the areas of defence, the protection of EU’s external borders, the environment, cyber-security, etc.; the sudden realization that the occurrence of a real threat in any of these fields would catch us equally ill-equipped and unprepared as was the case with the coronavirus, forces us to extend our response to the crises far beyond the field of economics.

If, indeed, the EU is the only entity that has the capacity to defend the interests of all its citizens and prevent the progressive vassalization of its individual members to foreign powers, it follows that the priority must be for the European Council to endow itself with the necessary “political” architecture before even considering the economic response to the world recession (depression?) which, whatever its length, will profoundly modify our way of life.

The challenge is nothing less than convincing public opinion that European solidarity is the best rampart for sustaining our cherished democratic freedoms and social protection, despite the deep harm wrought by the excesses of financial capitalism that has significantly exacerbated social inequalities. The alternative – whose attraction may have been boosted by the remarkable discipline accepted during confinement – could encourage people to give their support to adventurous nationalist authoritarian regimes; their leaders (for the most part presently in the political opposition) are highly critical of the governments in power, making them easy scapegoats for the totally unforeseeable current dire situation.

It is therefore imperative to engineer a political consensus to drive the EU towards a “Federal” entity.

Without waiting for the formalization of the complex procedures involved, it is urgent to implement immediately measures authorized by the existing treaty. These include:

First, accelerate (with the necessary assistance) the joining of the EMU by the 8 non-members in order to have perfect superposition of the EMU and EU. The current turmoil should encourage maximum flexibility on the basis that the strength of the whole (27) will be greater than the sum of the parts (19+8). Countries that would refuse (in violation of their treaty obligations) would be invited to leave the Union.

Secondly, agree on substantially increasing the size of EU budget, endowing the Union with significant own resources (European level taxes and duties) and a corresponding borrowing capacity. By coordinating a reinforced EU economic policy with the ECB’s monetary policy, the EU could finance the economic recovery with the same flexibility enjoyed by the US federal government.

Thirdly, engaging on the international markets armed with equal weapons to its rivals where its unmatched collective economic clout would weigh heavily, it could progressively liberate itself from the overwhelming domination of the US dollar, re-appropriating a shared  (with the MS) monetary sovereignty that the Eurozone  currently woefully lacks.


Facing the huge challenge of exiting the crisis initiated by the coronavirus, it is now that the choice must be made between a free, social, powerful and united Europe who has the ambition and capacity to disseminate its values throughout the globe on the one hand and, on the other, succumb to the sirens of national-populism who will rapidly submit to the dictates of other major powers whose own vocation and ambition is to supplant our secular European exceptionalism.

The quality of life that the coming generations will inherit from us as well as the possibilities they will have to forge their own future will be entirely dependent on the choice we make. History does not often offer a second chance!