Stimulus deal is a new chapter for Europe — but what does it mean?
“A new chapter for Europe”
By Prof. Dr. Henning Vöpel, HWWI
Was the outcome of the EU summit a step forward or back for Europe? We don’t know for sure yet. At least the summit means a further evolution of Europe. Europe has always developed in small steps – mostly under the conditions of threat, turmoil and crisis and in this respect evolutionary. Struggling to achieve this is ultimately a quality and the hallmark of pluralistic and democratic, and not just populist and anti-democratic, societies. Europe is and has always been the result of the sum of its historical experiences and achievements in the history of ideas. Even if it is out of date: Political history is more important than ever for shaping the future.
Against this background, it is historically dialectically correct that the so-called “Frugal Four” have clearly expressed their concerns. The compromise is necessary because it is right to think about this step, the consequences that it has, the conditions that it demands. Statehood cannot simply be proclaimed by a “Hamiltonian moment”. But it was a “moment of truth” and Europe did well to use it that way. Being able to go into debt together in an exceptional situation is certainly correct, the risk of false incentives or even a debt union is rather low. However, European tax sovereignty requires European legitimacy and executive responsibility.
If Europeans look back on the early 20s in half a century, they will classify these years as historical, because not only is Europe on the move, the whole world and its order are. The post-pandemic order will be different. The deep crisis may have allowed the US to continue its gradual loss of meaning. In retrospect, China’s global political ambitions – if and insofar as it really does have them – could have failed due to Hong Kong, the scope of which will probably only become clear later. In the end, China will not be ready to provide the level of openness necessary for global leadership. And Europe? Europe is far from fulfilling this role. In truth, Europe is historically and institutionally very far away – too far away.
“Who do I call if I want to speak to Europe?” Henry Kissinger once asked this rhetorical question to make it clear how little Europe had a contour to the outside world. Who do we mean when we talk about ourselves in Europe could also be a question, but directed inwards. The strengthening of European identity and values is an imperative for building a European statehood. Conversely, of course, Europe must also become more political, for example, and especially in foreign policy and defense – this is where internal understanding and the external role come into play. European values - also in their geopolitical importance – can also be meaningfully strengthened in technology development, data protection and data ethics or the climate protection goal. European public goods and a common industrial policy can be financed well through European budgets. But Europe is honestly miles away from a common pension or labor market policy. Heterogeneous preferences are difficult to translate into common rules here, and maybe that’s a good thing.
The COVID-19 crisis may have shown approaches of a common European public for the first time, which is so important for political and social discourse and solidarity for one another. It remains to be seen whether Europe will actually come out of the crisis much better than others, the USA or China. The state institutions worked well, much better than in the United States or in China or other autocratic countries. But no more than a strong economy can replace a functioning state, a strong state cannot replace a functioning economy. Both will be important for Europe in coping with the crisis. And the strength of the state and the economy can ultimately be Europe’s advantage. The technological and industrial renewal of the European economy must be the goal of the coming years – far beyond the goals and instruments of the current reconstruction fund. Europe needs to be a leader in technology and science.
In this sense, the outcome of the EU summit was good and an important step: it showed and strengthened Europe’s willingness to show solidarity in the crisis. This is important because the crisis could dangerously increase economic divergence. But at the same time, it made it clear that responsibility and accountability belong where they are legitimized. This is important because this is the only way to strengthen political convergence. It is quite possible that in the end there will be a European country. It is not yet clear what the next step for Europe will be from here, whether a European Monetary Fund or a European security policy. First of all, there is Brexit. The political balance in Europe has already shifted without the British; the outcome of the summit also showed that. A new chapter in Europe is opened.
Prof. Dr. Henning Vöpel has been the director of the Hamburg World Economic Institute (HWWI) since 2014. In 2010 Vöpel was appointed professor of economics at the HSBA Hamburg School of Business Administration. His main research and topics are business cycle analysis, monetary policy, financial markets and digital economy.