The coronavirus pandemic has unearthed one of the largest internal workhorses for the European Union. The pooling of members’ debts to face a common enemy. Yesterday was the debt crisis. Today is the battle against Covid-19, a disease that has infected at least 377,000 people in the block and killed some 28,000. But the now-called coronabonds (baptized by the European Commission in 2011 as eurobonds) have again met with the fierce opposition of several members, including a key voice: that of Angela Merkel.The chancellor, little given to clear positions and headlines with edges, did not hesitate this time in categorically refuse the proposal of Italy and Spain, the two countries with the highest number of deaths from the coronavirus. He preferred on this occasion that the European summit of last week failed to seek, as usual, complex consensus. It has its reasons. Partisan, electoral and ideological. But there is also an argument – and weight – not to throw in the towel in Madrid and Rome. Although for that Europe must first see itself on the brink of the precipice.
No, for the good of the party
The chancellor is already on the exit ramp. In 2018, he left the presidency of his party, the Christian Democratic Union (CDU), and has already announced that at the end of this term, at the latest in September 2021, will leave active politics after 16 years at the head of the first European economy.
Merkel, as a party woman, thinks more about her training than her own personal legacy and knows that the Coronabonos would be an indigestible inheritance for any of the three politicians who have already applied to succeed her at the head of the party (and therefore be , the conservative candidates for the Chancellery).
Neither Armin Laschet nor Norbert ROttgen nor Friedrich Merz are in favor of pooling debts within the EU. Their positions are not exactly the same on this point, but none have been in favor of the Coronabonds (as other German political leaders have done, especially within the Greens). They have also been openly rejected by the other potential conservative candidate for chancellery, Markus SOder. He is the president of Bavaria and of the Social Christian Union (CSU), the party twinned with Merkel’s CDU, with whom he always presents a consensus common candidate for the general election.
The moral damage and the myth of the housewife suaba
Merkel also has ideological reasons for her no to the Coronabonos. The idea has never had great traction in his country and, more specifically, in the right half of the center of the ideological spectrum. Especially in this environment, the fear of moral damage and the myth of the housewife suaba, who saves penny to penny (de marco) and never gets into debt, are recurrently used, both in the debt crisis and in the current crisis. Two elements that fit very well into the German mentality and in the traditional Protestant ethic of effort and saving.
The concept of moral damage is the doctrine, widespread in northern Europe, which argues that helping other countries financially promotes fiscal indiscipline.
Helping other countries promotes fiscal indiscipline, according to the moral damage doctrine
In his mind, crime must be followed by punishment. In this case, whoever needs help must have the aseptically named “conditionality”, that is, the budgetary adjustments and structural reforms. This is what happened in the debt crisis with the periphery.
That is the DNA in the guts of the European Stability Mechanism (ESM). For this reason, Italy has refused to make the ESM the instrument used to face the economic consequences of the coronavirus, because here the most affected countries have no alleged guilt to purge. The pandemic is an external and supervening cause. And perhaps that is why the Dutch Finance Minister, Wopke Hoekstra, ironically wondered why the countries of the south had not saved in boom times to now have fiscal margin to resort to, to argue against the Coronabonds. Planting the seed of guilt.
The third reason for it is not electoral. The average German voter is not sympathetic to the idea of the Coronabonnos. And less and less the more they list to the right. Such a turn would be very costly for the CDU at the polls, especially considering that to their right is another formation, the far-right from Alternative for Germany (AfD). Accepting this option could lead part of its electorate to abstain and others to the arms of the radicals, who have already pumped into any type of pooling of debts within the EU.
It cannot be ignored that those who vote for Merkel (or the future German chancellor) are the Germans. And few politicians are willing to make a decision that can cost their voters money and will not report anything (directly and quickly) to them. As long as crucial decisions in the EU continue to be made by heads of state and government, who they depend on the votes of their nationals and not on those of the Union as a whole, it will be difficult for instruments such as the coronabonos —in any of the formulas proposed today— to take shape. No matter how many appeals to solidarity are made.
A reason for hope
However, all is not lost in this debate. It would not be the first time that Merkel has turned 180 degrees in any of her key policies. It has happened on significant occasions. It happened in 2011, when in the wake of the Fukushima disaster the chancellor decided Germany’s ‘nuclear blackout’ by 2022 (just six months after having extended the average life of nuclear power plants and placing the closure of the last one in 2036). It happened again in 2015, when after repeatedly denying it was going to happen, Merkel defended a third rescue for Greece.
It has been repeated again in recent years, more gradually, when the chancellor has acceded to increasingly restrictive reforms of immigration and asylum laws, despite having been praised worldwide for her decision to keep borders open in 2015, when a million refugees entered Germany. And it just finally happened again. In the wake of the economic crisis unleashed by the coronavirus, Merkel has agreed to bury – momentarily – the goal of ‘deficit zero and, after five years with positive accounts, this year Berlin will go into debt again.
These four moments have a common denominator. A critical moment that allows Merkel to ensure that, for a superior good, “no alternative” that of crossing a red line that until then she herself had described as impassable. After Fukushima and with the Covid-19, it has been about the health of the citizens. With Greece, the objective was to avoid ‘Grexit’ and maintain the unity of the EU. Now it could be the two combined. Health and unity. And that, paradoxically, may be the reason for hope. That the situation in Europe becomes so critical with the coronavirus pandemic that the chancellor has no choice but to pull rhetoric and flexibility and lurch to change the battle against Sars-CoV2, Germany and the history of the EU.