2020 will go down in history as the 21st century’s EU turning point thanks to COVID-19

Luca Jahier, President of the European Economic and Social Committee

The wind of change is blowing more wildly than ever. Entrenched taboos are falling away, and things that had been awaited for more than 20 years are happening within days and weeks. We must all not waste this historic moment. 

 

 

2020 will be a year that we will remember for a long time. It has been the year that the COVID 19 pandemic hit, which has triggered a health, economic and social crisis and even a democratic crisis in some Member States the likes of which has not been seen since the end of the Second World War. But 2020 will also be remembered as the year in which the European Union was able to take unprecedented decisions to do everything that was needed to remain united, competitive and rooted in solidarity.

In two months, after some initial hesitancy, Europe has seen a change of course unth inkable at the beginning of 2020, aimed at tackling the crisis and building a plan for the future that is even stronger and more resilient than what appeared in the von der Leyen Commission’s work programme.

It was only at the end of February that the EU summit on the new multiannual budget failed spectacularly on fractions of a percentage and a cacophony of voices in which everyone wanted everything and more, while paying even less than in the previous decades and with more conditionality.

From 13 March, when the European Commission announced the initial measures to tackle the pandemic, and since 17 March when the European Central Bank deployed its firepower to avoid the collapse of Member States’ public finances, everything has changed.

Well over three trillion (incidentally, more than three times the much evoked post war Marshall Plan at current values) have been mobilised, shattering entrenched taboos. Take the suspension of the Stability and Growth Pact. Take the substantial derogations from the state aid rules, unleashing EUR 2 trillion of direct state intervention to rescue businesses.

Of course, it is not that those taboos were unfounded. The first was rooted in the simple common sense that a balanced budget and sound management of excessive publi c debt is necessary. The second aimed to prevent unsustainable internal market imbalances and tackle divisions between states that have the resources to intervene and those which don’t.

But this time, the #WhateverItTakes took place in a matter of few wee ks rather than in four years and under radically different conditions.

Then, came the SURE mechanism, a long awaited scheme to support national unemployment insurance schemes, providing an additional €100 billion. Money that will actually be a first form of debt mutualisation, to help those most in need. Unthinkable.

Now, while awaiting the overall package on the Recovery Fund and the new MFF, we are witnessing a new unthinkable acceleration.

What many had been calling for for years comes true with the Franco-German U-turn. The antithesis of the 2010 summit outcome: Common debt issuance of €500 billion, channelled through the European budget, mainly to be used as non repayable transfers to the most affected countries and sectors, with the clear aim to repair the economy but also invest in the key sectors of the future. Together. Unthinkable.

In addition, there is talk of a clear transfer from national taxes to the EU’s own resources (based on Article 311 of the Treaty), of taxes imposed o n the digital giants and a European minimum corporate tax, putting seriously on the table the question of preferential tax regimes.

It could be said that after the controversial judgment of the Court of Karlsruhe, which pointed to the deep rooted, radical debate in Germany, and after a crescendo of statements from all the major offices of the state, Chancellor Merkel has made a huge historical shift , deciding that it was time to share the risk, increase European spending and investment capacities.

Thus, o n 18 May, 70 years after the Schuman Declaration, Chancellor Merkel and President Macron announced the joint plan to rescue Europe and save the European project.

This breakthrough has been carefully prepared for some time as demonstrated by the high level of consent of the majority of the German population, with poll numbers that were unthinkable only last autumn.

There is certainly still a long and bumpy road ahead. The final commitments will have to be more substantial and tough negotiations will must u sher a new series of balances.

However, it remains clear that we are witnessing an unprecedented wind of change, supported by new political energies and converging social forces.

I am therefore confident that, between now and the end of June, important choices for our future will be consolidated and that the six month German presidency of the EU, starting on 1 July, will be able to lead us through this uncharted territory, forming part of the Renaissance of Europe.

The spirit of our founding fathers, with a strong focus on the concept of solidarity, can be felt as never before. I am sure that Adenauer, De Gasperi and Schuman, who all had the German language in common, would have been delighted to see their far sighte d vision continue to bear fruit: the whole is indeed stronger and more prosperous than the sum of its parts.