UU Future of Europe #3: Europe's North-South division resurfaces during Covid-crisis

In 2020, 70 years after the Schuman Declaration, we commemorate the construction of a united Europe. Europe now faces a crisis which makes the unprecedented debate surrounding the identity of Europe even more important and complex. By sharing different perspectives for grasping Europe’s history, core values and current fragility, we hope to shed a light on the possible scenarios for moving forward.  

This third contribution to the blog series #UUFutureEurope is written by Dawid Aristotelis Fusiek, MA graduate student in the International Relations in Historical Perspective programme at Utrecht University. He elaborates on the lessons stemming from EU's response to the narrative of the "North-South division", preceding the adoption of the recovery plan during the crisis. 

In this Future of Europe blog series, researchers reflect on Europe’s future in relation to the current Covid-19 crisis.

The Covid-19 pandemic has been the root of an exceptional number of problems for all international actors. Since the classification of the virus as pandemic (announced by the World Health Organization declaration on 11 March), countries all over the world have been forced to implement lockdown measures. In the case of the European Union, the near-lockdown measures proved to have severe consequences on the internal European market and the relationship between the North-South Member States. While seemingly apart, these two issues are deeply interconnected and necessary for the understanding of EU’s adoption of the 750 billion package.

When taking a closer look into the numbers of the coronavirus pandemic, it becomes apparent that the southern European countries, such as Italy and Spain, were hit much harder than their northern counterparts. Due to their total lockdowns, the governments were confronted with the task of finding hundreds of billions of euros to prepare for the second half of 2020, to cover the expanses of their health care systems, and pay millions of idled workers. The situation has not improved following the relaxing of the restrictions, as several countries have experienced a significant diminishment of gains in their leading sectors, such as Tourism. 

The “grandeur” of the issue pushed the southern countries to propose a shared European response in the form of a massive “Eurobond”: a jointly issued bond guaranteed by the totality of the Member States. By utilizing its excellent credit rating - its high ability to pay back the debt - the EU could raise trillions of euros for all its affected countries. However, the discussions over the treatment of the pandemic’s economic repercussions resurfaced an older internal issue, that of the North-South division. Fortunately, the EU managed to tackle the growing rift between its Member States and formulate a shared response to the economic toll. This brief contribution aims to examine the way the EU accomplished this difficult undertaking and investigates the lessons stemming from these occurrences.

Does the future of the EU rely on its response to this crisis?


Europe's North-South division

The antagonism between northern and southern European countries is not a modern phenomenon. According to Tino Sandanaji, the roots of this rift can be traced back to the ideas of Max Weber. The prominent sociologist suggested that Protestant countries in Northern Europe have outperformed the rest of the continent due to their superior work ethics and the efficiency of their social networks. In contrast, other scholars such as Roy Smith and Serkan Saltik have attributed this division to the practice of modern economists to categorize countries into developed and developing (for instance, the United Nations Development Program). Correspondingly, in the context of the EU, the northern Member States take the position of the former, while the southern ones constitute the latter. A good instance is the recently revoked idea of Europe of two-speeds.

As for the EU, many recent developments have contributed positively to the emergence of the narrative of the division. One of the most characteristic examples was the 2008 economic crisis, when the strong northern economies did not want to bear the burden of the economically vulnerable southern countries. The following migration crisis of 2015 reinforced the feeling of the southern tier that the EU and their northern counterparts abandoned them once again. This belief resulted in the rise of Euroscepticism, populism and strong anti-European feelings in the south of Europe.

Coronabonds as a manifestation of the North-South division

The coronavirus pandemic seemed initially to prolong the same narrative. Following its escalation, some Member States such as Germany banned the export of vital medical supplies to needy countries (mostly southern) like Italy. On top of that, the "Eurobond" proposal mentioned above was met with severe criticism from countries in the North. Germany and the Netherlands for example, opposed the idea as it would mean that their taxpayers would have to "carry the weight" of the states that have traditionally suffered from numerous self-caused financial and economic problems. Instead, they pushed for the use of the already existing European mechanisms (such as the European Stability Mechanism) that they considered to be more than capable of helping the countries in risk. Characteristically, Dutch Finance minister Wopke Hoekstra stated that "coronabonds" risked undermining "incentives for sensible policy": the so-called moral "hazard argument" familiar from the last euro-zone crisis that countries with more debt should essentially learn from their mistakes.

As expected, this statement was not well-received by the southern tier members that interpreted it as a lack of solidarity, the negligence of their concerns, and eventually, a sign of hostility. While the Portuguese Prime Minister characterized this stance as repugnant, Italian mayors and regional governors accused the Netherlands of effectively being a "tax haven", stealing from all the big European countries for years. Moreover, the media and press did not take long to stir up the dispute by presenting it either as a manifestation of the North-South division or the end of the European vision. Generally, there was a real feeling that the future of the EU relies on its response to this crisis.

Towards internal unity

This time the EU did not remain stagnant. Unlike before, the EU did not let the resolution of the dispute to the Member States. Instead, it took an active role in the process of moderation of the preexisting tensions. Firstly, the EU proposed a viable solution to the member states. The European Central Bank (ECB) "rolled out its heavy guns" by offering a 750-billion-euro program to underwrite debt from European countries – in an attempt to keep borrowing costs for severely affected countries as low as possible. Secondly, the EU adopted the role of mediator between the two "camps", to facilitate dialogue and avoid further escalation. Thirdly, since the escalation of the tensions, the EU took a firm stand on the issue, which was especially visible in the official discourses of its representatives. For example, while Christine Lagarde (the head of the ECB) called for Europe to step up and adopt the bank's proposal, the Commission President Ursula von der Leyen highlighted the need for solidarity and support of the ECB’s plan.

In this manner, the EU accomplished to show internal unity, impede the prolongation of the disputes, and support its goal of formulation of a collective European response. The combination of these practices contributed positively to the fast and “drama-free” adoption of the deal by the European Council on 27 May.

The coronavirus pandemic has tested the efficiency and unity of the European Union

Collective responsibility

Despite the hostile climate and the lengthy negotiations, the EU has accomplished to emerge from the crisis as a reformed actor. It managed not only to present a valid alternative but also to take a leading role in the negotiations. Moreover, the EU provided the Member States with the instruments and channels of communications that facilitated the formulation of collective response and the alleviation of the preexisting tensions. In contrast to the series of EU's mishaps in the last decades, this deal "showed the collective responsibility and solidarity and [...] belief in our shared future", as Michel, President of EU Council, proclaimed. The Member States proved that they could set their difference aside in the face of a common threat, a move that might have positive implications for foreign investments and the EU's role in the international system.

Nonetheless, the EU should not dismiss the underlying issues revealed during this period of negotiations. The "frugal states", including Sweden, Denmark, Austria, Finland, and the Netherlands, put the European project in danger by insisting on lowering of the amount of the package of 750bn. Their persistence caused not only the anger of France and Germany but also the diminishment of the final adopted figure to €390bn (instead of the initial €500bn).  What this implies is that the North-South division has reshaped itself into the (called-by the media): "frugal states", "Club Med" and "no Europe". Furthermore, the Visegrad group countries, such as Hungary and Poland, threatened to veto the package if the EU would withhold funds from nations that deemed to fall short of democratic principles. Both these developments could potentially harm any ambitious future European projects and attempts of further integration.

The lessons of the pandemic

The coronavirus pandemic has tested the efficiency and unity of the EU. The huge economic toll and the lack of consensus regarding its treatment not only resulted in the reemergence of internal problems, mainly the narrative of North-South division, but also seemed to be the final “nails in the coffin” of the European undertaking. However, the EU accomplished to block the prolongation of the increasing rift by adopting the role of mediator and facilitator. While the EU functioned as a channel of communications between both sides, its institutions proposed a viable alternative or solution for its Member States.

Furthermore, it provided the platform for the transnational discussions and achieved to tone down the existing rhetoric. This “multidimensional” approach proved to be effective, hence leading to the formation of a 750billion recovery fund. The outcomes of the negotiations were well received by all the Member States, especially the southern ones. Contrary to the past, the EU took interest in their concerns and came up with a concrete solution. This turn of events dismantles the discourse and elements sustaining the social construction of the division (by media and the populist parties), but only time will tell if the preexisting anti-European feelings will recede.

On top of that, the negotiations revealed that the EU is suffering from underlying divisions that could potentially lead to future disputes. The insistence of “frugal states” on a lower level of spending or the opposition of the Visegrad countries to democratic reforms could seriously threaten the further integration of the European undertaking.  However, the coronavirus pandemic provided the EU with the experience to handle future internal tensions. The aforesaid "multidimensional” approach could serve as a paradigm for future de-escalation of similar esoteric tensions. Nevertheless, for now, the European project is safe. The successful confrontation of the crisis has not only set sound fundamentals for the progress of the EU, but also has reinforced the European citizens’ confidence (maybe for the first time) in the institutions (ECFR, 2020).

Rethinking Europe: exchanging ideas on Europe’s future

Following the European initiative for a conference on the future of the EU, scholars from Utrecht University share their thoughts on the Future of Europe in this blog series, offering different perspectives and covering different fields of studies. 

Are you interested in sharing your (academic) perspective on the Future of Europe as well? You are welcome to contribute to our series #UUFutureEurope.

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