German Chancellor Angela Merkel recently gave an interview to six European newspapers, talking about Europe’s economic response to the coronavirus pandemic, Brexit and the challenges posed by the United States, Russia and China, in particular because of the political tensions between them. This interview needs to be put into a context, in that Germany has assumed the presidency of the EU Council for the second six months of this year. The context also has to take into account the economic crisis caused by the pandemic.
In this role, Merkel can shape the EU agenda and provide direction for 2021. Given that Germany has the largest economy of the EU, that Germany is considered as the locomotive of the EU economy, and that Angela Merkel herself is still undisputedly Europe’s leading political leader and probably enjoys more respect than any other global political leader, what she has to say is most definitely of paramount importance.
She is not new to being president of the EU Council at the time of crisis. Thirteen years ago, she was in the same position. At the time, the world was in the throes of the worst financial crisis in 80 years and a couple of EU member states had just rejected the European constitutional treaty which was to pave the way for important reforms in the EU.
COVID-19 has hit each country, no matter how rich or poor that country was. It has hit wealthy people as well as poor ones. It has struck whoever got in its way. Maybe it is significant to note that the region of Italy that was most hit by the pandemic is Italy’s richest region – Lombardy. The pandemic halted the economic growth which EU countries were experiencing and reversed the gains made after the economic recession of a decade ago.
High unemployment is a threat to democracy and to the EU
This happened when there were two other factors in play and which were already having a significant impact on the European economy, irrespective of the pandemic. The first is climate change and the second is digitisation.
The German Chancellor expressed her position very clearly and sets a tone which leaves very little space or time for doubt. At one point of the interview, she said it was in the interest of all member states to maintain a strong European internal market and seek positions that unite rather than divide. EU member states need to stop resorting to protection at all costs of their own individual interests. The EU has to set the example to the rest of the world in promoting multilateralism.
She adopted an even stronger stance when she stated that high unemployment is a threat to democracy and to the EU and that for the EU to survive it needs to have a strong economy.
She spoke about the recovery fund that was set up to deal with the economic impact of the pandemic. The issue is that most countries are still afraid to resort to it because of the strings that may be attached to it, such as fiscal harmonisation and interference in fiscal policy (an item that is still under the responsibility of the member states).
I sensed an underlying message in Merkel’s interview. She seems to believe the EU has a unique opportunity to take on a real leading role on the world stage. It no longer needs to be subordinate to other powers such as the US, Russia and China. However for this to take substance from a political perspective, the EU needs to ensure that its economy is capable of recovering from the pandemic through its own resources.
The EU can occupy the centre of the political stage if it becomes the leading global economy, not so much because of its size but because it will be recognised as being more stable and capable at resolving economic issues. I believe that if the EU plays its cards right, this is a big possibility.