The coronavirus pandemic has effectively destroyed the global governance model and the EU should play a key role in rebuilding the international order, the bloc’s High Representative Vice-President Josep Borrell told reporters on Thursday (7 May).
“The coronavirus pandemic has ended up blowing up the model of multilateral governance that was tottering already over the past few years,” Borrell said.
He described the current international context as a “multipolar disorder,” with the US leadership missing and a growing tension between Washington and Beijing exacerbated by the COVID-19 crisis.
This could be an opportunity for the EU though. “In that new order that would need to be built out of the global disorder, Europe could play a role. In what way, it will depend on its internal unity,” Borrell argued.
“Europe cannot be strong in the world if it does not build internal unity,” he said. “The EU should learn the lesson and, in my opinion, go into further integration,” including on health care, Borrell argued, which “must have a European dimension.”
In the rest of the world, health has become a security issue, in Europe, it is an integration matter, he argued.
While national responses dominated at the beginning of the crisis, Borrell praised the “convergence and cooperation” that is prevailing now and said that whether nationalism and populism will grow will entirely depend on how the EU responds to the COVID-19 outbreak and on whether citizens feel protected by the Union.
A constitutional crisis
On Tuesday (5 May) the German Constitutional Court questioned the proportionality of the European Central Bank bond-buying programme that is considered as a critical part of the EU’s response to the financial crisis.
The decision went as far as to question the European Court of Justice work, as the institution backed the ECB in a decision in 2018, causing a political earthquake.
Borrell warned of the gravity of such a ruling, as it questions the scope of the EU court’s jurisdiction and argues in favour of imposing limits to the “whatever it takes,” former ECB head Mario Draghi pronounced in 2012 amidst the previous financial crisis.
“That magic sentence saved the euro back then and markets need to know if the ECB is an independent institution acting within its mandate and without limits or we are in a different scenario,” he said.
Borrell admitted that while all countries and constitutional courts are equally important, the quantitative weight of Germany in the ECB bond-buying programme explains the magnitude of the debate around the implications of the ruling.
The EU’s economic response
On Wednesday (5 May), the European Commission’s spring forecast painted a worrying picture, announcing the worst recession in the EU’s history, with the bloc’s economy shrinking by 7.4% this year.
Borrell warned that this might even be an optimistic estimate as the scope of the global economic crisis will entirely depend on the evolution of the COVID-19 pandemic. If protectionist behaviours were to dominate the global trade flow, he warned, Europe will be the biggest loser.
The institutions have been working on the EU’s economic response to the COVID-19 fallout, which has been a contentious issue. “We are still discussing how to organise solidarity,” Borrell admitted.
The German Constitutional Court’s questioning of the critical ECB bond-buying programme, which was intended to play a key role, added an extra layer of complexity.
“After the ruling, we need to take into consideration how flexible the bond-buying operations can be, the scope of the intervention through a recovery fund and the limits to a state aid ‘open bar’,” Borrel explained.
“Depending on how we administrate this ‘Bermuda Triangle’ we could blow up the Single Market,” he added.
[Edited by Zoran Radosavljevic]