A European (Pyrrhic) Victory
I do not like to come off as the prophet of disgrace, but at the end of a prolonged weekend of negotiations at the European Council, we may now know the reasons for a future European Union fragmentation.
This past weekend the European Council went over the plans of a recovery fund for the most affected areas of the European economy in sequence of the pandemic. With the temporary closure of the European economy, and temporary closure of borders much damage has been done to Europe’s economy, with the EU expecting a downturn of at least 7.4%. But the reality of Europe is Multi-faced, with certain countries having it worse than others, and this leads the idea that some countries will pay for others problems.
This economical aftermath will probably monopolize the talks of parliaments for the next months. And the only situation in which this monopoly will not happen, will be if a second wave of cases hits the Northern Hemisphere as it is expected with the coming of fall, flu season and badly damaged and overworked health services all across Europe.
With such a grim background surely, things could not get worse. But here is where the negotiations become relevant. Since the majority of the European countries are already under pressure, due to the pandemic and the shutting down of their owns economies, having to pay extra fees to help other European member states seems too much for taxpayers of countries that were also. And this is the case of the countries that self-entitled as the frugal this past weekend.
On this side of the negotiation table, we have the Netherlands, Austria, Sweden, Denmark, and Finland. From their point of view the 700 billion euros pack of measures will put a big pressure in its taxpayers, and it can only be accepted if the countries that will benefit the most will follow reforms.
On the other side of the negotiation, there are countries like Portugal, Spain and Italy that had a bad past with the “European reformations” and do not agree with the idea of a loan or fund from the EU that can turn out poisoned with austerity measures like the ones seen in 2011 that turned out to impoverish countries and not allow them to grow economically.
And the third party is composed by Hungary, Poland, and Slovenia. These countries only formed a group after concerns over non-democratic actions were raised as discussion topics in the European Commission. According to the deal, funds can be halted if a European Country is found to not respect the EU rule-of-law.
This is something that directly hits Viktor Orbán since he is been the main actor in Europe that took advantage of the pandemic situation to increase his overall power, as an example, being able to start ruling by decree.
And thus, Europe is divided in three.
The self-entitled frugal, led by Dutch prime minister Mark Rutte, achieved the victory of now having at their disposal a mechanism that allows any member state to stop the funds flowing if the state believes that the funds are not returning the promised reforms.
And only a qualified majority in the European Council can argue for the continuation for the funds flowing. Even though the Council has agreed that the debates over the mechanism will not last longer than three months, the mechanism is still a weapon that is the most effective against the countries that need most the funds like Italy, Spain and Portugal.
Not only that but the mechanism is not created in democratic terms, it was created in conflict-like terms. Since the mechanism can be actioned by any single nation if they see that reforms are not being made then it is up to the nations optics to see if whatever reform is being correctly applied or not, and this makes the mechanism look more like a trade war weapon than an actual regulation mechanism. If for example a dry dock is built in a country that can compete with the Netherlands over UK products or commerce from the American continent than the Netherlands can stop the funds under the pretext that this dry dock is not actually a reform, halting the funds to up to three months and possible stopping the project all together.
This is an immense power that is granted to a small minority of the EU because if any of the most affected member states try to use the same mechanism in any other country we know that the lack of funds can only be but a dent in reforms or industrialization of a country.
This just deepens the separation between a Northern Europe and a Southern Europe that was previously mentioned in our newspaper with Guilherme Bica writing on the Eurobonds that now sounds prophetic. Also, Isaac Vitorino on the “Ideal” Mediterranean Union, whose article begins with a brilliant example of the disunity feelings that countries are starting to have inside the EU.
The disunity is making it so that Far Right parties start having more reasons and arguments to be Euro Sceptic. If such parties start having a predominant role in Southern European politics than the EU can argue that these countries are not respecting EU Rule-of-Law and further separate Europe by preventing more funds to flow.
The reality that the only way the EU sees fit to punish those who do not agree with EU values is only monetary and not the expulsion from the EU reveals how crooked and trade focus is the EU.
And if a Union is only trade-focused than it should not care about Ethics, Values and rule-of-law, it should be strictly business. It is of political dishonesty to argue one day against a country because of their non-democratic values, but the next day arguing that the same country should not leave the EU because they pay fees.
You might notice that I did not mention the central block of France and Germany, this is because, in my opinion, the central block knows it is economically hurt by the virus but it also knows that it cannot be the only beneficiary of the Union or else the whole Union would implode. So, in this case, they had to the most centrist approach to the situation.
In conclusion, it is as if the weekend of negotiations at the European Council, even though productive and reaching its goal of creating an economical plan to recover from the pandemic, just deepen the differences among the EU member states and created the perfect storm for an EU falling out. Time will be the judge of what was decided this weekend, but we can now expect a new weapon inside the EU’s trade war.