On Thursday, the European leaders agreed to task the European Commission with creating a recovery fund to stimulate European economies in the light of the COVID-19 outbreak. Additionally, European Council President Michel called for the European Commission to conduct a study on member states’ needs and challenges.
I have been reading about the “corona bonds”, shared debt and solidarity for weeks now. Will the member states agree on mutualised debt or not? What will the hawkish Northern member states say? Most importantly – what will Germany say? Many previously held debates and arguments from the last financial crisis are being reused; demonstrating how little has changed in the last decade.
Thus, I actually look forward to reading these assessments on how the pandemic has affected European economies and societies. It will be refreshing and will directly address the current times.
Yet, there is a larger lesson to be highlighted here. In recent weeks, Southern member states have used a number of tactics to gain support for the idea of mutualised debt. For example, President Macron warned that an inability to agree will mean the end of the European project. Prime Minister Conte used guilt to enforce European solidarity. However, none of them addressed any of the most important questions – what are the needs and how will the potential money, whatever way acquired, be used?
For example, if “corona bonds” would be agreed upon – what would Italy use it for? How is Italy going to use it to onset economic growth? Where are the bottlenecks and what areas are a priority?
For the Northern member states, refusing to agree to shared debt is a question of principle on the one hand, and risk on the other. However, it is also a practical question.
Imagine being a teenager and asking for money from your parent. An immediate reply you hear back is: “What for?”
The Southern countries, especially Italy and France, must understand that if they want to have an effective and fruitful conversation with the Northern member states, they need to present a plan. A power-point presentation with SWOT-analysis would make the Northern member states listen and engage. It is unlikely to make the Northern countries bend on fundamental matters such as shared debt, but it would be a much more productive and less bitter conversation to begin with.
So, as a 13-year old teenager, if you want to go to the movies, you have to have your reason (all my friends are going), cost (15€ with popcorn and drinks) and timing (Saturday, from 13:00-16:00) ready. After all, no parent is going to give you money just because.