The risks of COVID-19 pandemic on international balances
The Covid-19 crisis hit Italy first, but it is now spreading without borders through the whole European Union. The pandemic is not only challenging the holding of national health systems but, inevitably, it raises firstly political and then economic and financial questions about the Union’s future. The strength of European architecture will depend on the response that member countries will give to the pandemic’s impact on the economies of the Old Continent.
The spread of the virus has a feature that we can define as “democratic”, as it spares no one and puts all countries on the same level. Its spreading does not depend on wrong policies or endogenous factors, as the 2008 economic crisis could have been. In that circumstance, some countries, such as Germany, feared the risks inherent to the softening of the rules of the Union and, above all, the possibility that some of the less virtuous members would exploit it as a justification for their shortcomings on compliance with budget constraints.
Today the context is different, even if it might not seem. The words of the President of the European Central Bank (ECB) created panic on the markets, but it does not appear to be exclusively dictated by a slip, but by a basic macroeconomic approach that Lagarde could carry forward. On the other hand, thinking of stopping the spread of the virus by closing the borders does not seem a decisive response to a health quota. Instead, it appears like something that responds more to the need to give something to the public opinion, left without a compass.
For this reason, it is difficult to see a coordinated solution on the horizon without real political awareness. There is generalized discontent with European Institutions, which are judged unprepared to give immediate answers to citizens. Indeed, offering political solutions on a national basis, without community coordination, would be the best viaticum for the dissolution of the Union.
Read the report