 | Irene Caratelli Associate Professor Program Director of International Relations and Global Politics Division Chair – International Relations and Business Administration The American University of Rome |
BREXIT AND COVID19: OPPORTUNITIES FOR A SOCIAL EUROPE?
The European Union (EU) has undergone four main crises in the past decades: the financial crisis, the migration emergency, Brexit and COVID19. These crises showed an increase in national and/or nationalistic perspectives of EU member states and a parallel lack of a burden sharing logic from EU institutions or the weakness of their powers. However, each crisis might determine different historical consequences on EU’s projection: some of them created a centrifugal effect – i.e. EU member states moved away from the European integration project; while others might trigger a centripetal effect – i.e. member countries could start moving towards a greater European integration. It is argued here that both Brexit and COVID19 might represent the opportunity for EU members and its institutions to support a new political ambition were a social and federal structure could balance the current market driven design.
The European sovereign debt crisis resulted in years of financial, economic, and political instability affecting many EU countries, most notably Greece but also Portugal, Ireland, Spain and Cyprus. The financial crisis was managed by EU member countries and its institutions following austerity policies which severed the impact of the crisis on the people determining a growing disaffection of EU citizens vis-à-vis the European integration project. Populist, nationalist, and extremist parties exploded across Europe advocating alternatively the exit from the euro and/or the EU. This crisis triggered a centrifugal effect questioning the existence of a European identity, strengthening national interests and zero-sum game logics.
The migration emergency saw EU member states fighting to push migrants back to the sea or bringing them back from where migrants left (e.g. Libya). The absence of a burden sharing logic and the ‘principle’ according to which asylum seekers should be sent back to the country where they first steeped into in the EU, increased tensions between Mediterranean and non-Mediterranean countries. The migration catastrophe triggered violent battles for political power with alerts about ‘invasion’, ‘crisis’, ‘identity threat’. Hundreds of people kept being swallowed up by the sea, body after body, year after year, while European countries were discussing their rights. The migration ‘crisis’ has been flaming a centrifugal effect.
In 2016, after decades of enlargement, the Brexit Referendum opened UK negotiations to leave the Union. Brexit seemed the trigger for a domino effect opening the prospects for EU’s progressive disintegration. Brexit in 2020 shows that the UK entered a dangerous venture that might affect its own stability and integrity (i.e. Northern Ireland and Scotland), with no plan and little (if no) benefits. Not only the EU showed great unity during the storm, member countries resisted UK’s divide and conquer strategies, but Brexit opens incredible opportunities for the Union to end, or at least mitigate, the market-driven agenda of European integration. UK’s influence on the Union has always been focused on the maintenance of the neoliberal agenda, fighting any major social-political integration step. When the UK was not able to impede, or obstruct, further European integration projects, it negotiated opt out clauses (e.g. the euro and the right to strike and form trade unions recognized by the Charter of Fundamental Rights of the EU).[1] The absences of the UK in EU-post COVID19 negotiations entails that the Union has more freedom to put on the table plans that were unacceptable and unthinkable when the UK was a relevant stakeholder of the EU. Hence, Brexit is potentially a centripetal crisis of the four mentioned above.
Once the EU was invested by the COVID19 pandemic, national and nationalistic divisions erupted again.[2] At the start, EU institutions were caught by surprise: no protocol, no collaboration and/or cooperation, just the ratification/acceptance of member states’ policies (e.g. suspension of the Schengen agreement). Each EU member country decided what to do/not with no EU guidance, support, and solidarity demonstration. When EU institutions were not absent, the heads of key institution gave dramatic statements deepening the crisis – e.g. the early declarations of the head of the Central European Bank.[3] The President of the European Commission apologized repeatedly.[4] Finally, key EU institutions made important steps adopting measures that were unthinkable during the financial crisis.[5] These measures are not enough to tackle an estimated 15% contraction of the eurozone output in the second quarter of 2020 after an almost 4% contraction in the first three months of the year.[6] The fight over the plans that must be agreed in the next European Council (i.e. the Recovery Fund and the Next Generation plan), will focus on whether countries will access loans or grants and whether countries that have been net contributors up to now could become beneficiaries of European funds (e.g. Italy). Whether the EU will face COVID19 as a unit or as the sum of its members will determine the economic impact of the crisis and the nature of the EU as a political animal. Of the four main crises the EU went through recently, Brexit and COVID19 represent the opportunities for the EU to make a step forward towards a social and federal dimension, against the market-fundamentalism blinders that kept hostage the EU up to now.
[1] During the negotiations for the draft of the Charter of Fundamental Rights of the EU (2000), the UK unsuccessfully tried to oppose the inclusion of the right to strike and the right to form trade unions (Gerbet, P. 2016, “The Charter of Fundamental Rights of the European Union”, CVCE). As a result, the UK negotiated a protocol to secure a partial opt-out from the Charter of Fundamental Rights to limit the possibility that it could weaken British labor law allowing more strikes.
[2] Hall, B. M. Johnson, M. Arnold (2020) “Italy wonders where Europe’s solidarity is as coronavirus strains show” Financial Times, March 13,
https://www.ft.com/content/d3bc25ea-652c-11ea-b3f3-fe4680ea68b5
[3] “Referring to calls for the ECB to go further and cut interest rates to ease borrowing costs for highly indebted eurozone countries, Lagarde said: “We are not here to close [bond] spreads, there are other tools and other actors to deal with these issues.” […] Within minutes of her comments, the spread between what investors will buy and sell Italian bonds for widened, sparking fears of a repeat of the 2012 eurozone debt crisis when the then ECB boss, Mario Draghi, declared he would do “whatever it takes” to preserve the euro. The interest rate on 10-year Italian bonds jumped from 1.3% to 1.8% as concerns quickly escalated that the bonds issued by Europe’s most indebted country posed a greater risk to investors without the full protection of the ECB”, Inman, P. (2020) “Christine Lagarde under fire for ECB coronavirus response” The Guardian, Thursday, March 12.
[4] https://www.dw.com/en/coronavirus-eu-apologizes-to-italy-for-initial-response/a-53142603
[5] The European Central Bank started injecting liquidity in national economies (Pandemic Emergency Purchase Programme). The measure adopted by the European Commission are also significant: i) suspension of the rules of the Stability and Growth Pact (i.e. elimination of deficit and debt constraints for member states); ii) new rules preventing state aid to national firms; and iii) flexible use of funds from the 2014-2020 budget. An agreement has been reached also on: a) the use of the European Stability Mechanism (ESM) to cover COVID-19 related costs without the previous conditionality; b) the funding to small and medium-sized enterprises from the European Investment Bank (EIB); and c) the Support to mitigate Unemployment Risks in an Emergency (SURE Programme).
[6] https://www.theguardian.com/business/2020/apr/30/eurozone-suffers-record-slump-as-coronavirus-lockdown-reverses-growth