The dramatic juncture in the world reminds one of the old saying: If Athens weeps, Sparta is not laughing. Athens, the great power of millennia ago, suffered at the hands of the Spartans but Sparta too was in grave peril. It is happening now to the great power of our era, the United States, and to upstart European Union.
Between the two, it is the European Union that by far runs the major risk. While the danger in the U.S. is becoming the epicenter of the coronavirus pandemic (with over 82,000 people infected), in Europe open warfare has blown up between nine of the member states – including France, Italy and Spain – and the rest of the 27 members of the Union, led imperiously by Germany, aligned with Holland and other northern states affected by idiosyncrasy toward the southern members.
Americans are far too worried by the impact of coronavirus on the general health of the nation and its economy to notice that their most important partner and ally, the European Union, is floundering, a course of events that will harm America as well.
Things have gotten so bad in Europe to the point that the prime ministers of Italy and Spain refused to sign a declaration at the recent summit meeting that was drenched in vague language and devoid of concrete measures. There was hardly a trace of the “coordinated strategy” that Europe desperately needs.
The lesson in Europe is this: global problems demand continental solutions, national responses are not enough. Those who have always been against strong interventions by the European Union’s bodies continue to apply the logic of the broken watch: twice a day it is correct. The sovranist demagogues in particular maintain the old mantra that the European institutions are obtuse and ideological and that Germany does not countenance deficits because they are not part of its DNA. Many wise people are saying that the mandate of the European Central Bank is wide enough to allow extraordinary interventions in extraordinary times. The bank is trying to reduce the cost of anti-virus deficits but its monetary policy has many limits and finds it difficult to impact the real economy when the channels of monetary transmission are blocked by uncertainty. This threatens to be the case, engendering the fear that the euro, the European currency, will crack under the pressure. The former president of the bank, Mario Draghi, the man who saved the euro a decade ago, has called for a coordinated fiscal policy. The European Stability Mechanism (ESM) can activate the disbursement of 410 billion euros. Many experts are calling for a single emission that member states can draw from, with the only pledge to use their share to combat the spreading of the epidemic and not for current expenses.
Given the resistance of the sovranists and part of the German establishment to call the ESM into action, many fear that the rigidity of the opposition may soon lead to a crisis of credibility of the common currency. The logic of “save yourself, if you can,” will prevail and the euro will sink. The European Union will never have the money that the United States can bring into play, as it has already shown. It will take political will to use all monetary resources and a great deal of leadership to repeat the miracle that Mario Draghi engineered when it called for “whatever it takes” in 2012. The euro is worth saving as a powerful tool to face globalization and its ills. One hopes that the Dutch will understand that it is the only option if they want to continue to sell their tulips to grieving people in Italy and France.