international analysis and commentary

A bazooka of words


“We are at war,” President Emmanuel Macron stressed six times as France slipped into lockdown to halt the spread of the coronavirus. “We are at war (…), fighting an invisible enemy,” US President Donald Trump echoed from the other shore of the Atlantic, talking himself up as a wartime commander-in-chief. Many among world leaders are employing the language of the battlefield in this moment of increasing global uncertainty and mounting fear.

Yet, despite pundits laying off the war metaphor for a global pandemic, the heterogenous front bundling together Paris and Washington has found an unexpected high-profile supporter.

A few months after leaving the EU’s top monetary job, the former president of the European Central Bank (ECB) Mario Draghi took the stage on 25 March to stress the military lexicon, while providing some meaningful context. “It is the proper role of the state to deploy its balance sheet to protect citizens and the economy against shocks that the private sector is not responsible for and cannot absorb. States have always done so in the face of national emergencies,” Draghi wrote in an op-ed published by the Financial Times.

Mario Draghi


Wars come in handy as examples of that. In wartime, states increase their public debts to mobilize liquidity, support productive capacity and protect employment, while avoiding taxing fellow citizens, Draghi warned. This is the time to step up the game to fight the coronavirus and save the European economy and society. Despite retirement, Draghi spoke up just as he did eight years ago, when he demonstrated the power of words by spelling out clearly that the European Central Bank was ready to do “whatever it takes to preserve the euro.” The move was aimed at reassuring international investors about the health of the Eurozone amid the sovereign debt crisis, anticipating his policy “bazooka”, a special lending program to help central banks bail out their economies.

Draghi’s remarks came on the eve of the informal video conference meeting of the European Council on 26 March, as a wise piece of advice for EU leaders to sleep on. Just as in Charles Dickens’ “A Christmas Carol”, where three spirits visit the greedy and selfish businessman Ebenezer Scrooge to convert him into a kinder man the night before Christmas, so was Draghi’s intervention seen as an injection of long overdue moral authority.

Indeed, Draghi’s successor at the helm of the ECB, Christine Lagarde, had been under fire for not being as resolute as her predecessor in reaffirming the role of the institution to protect the Eurozone from a recession triggered by the coronavirus outbreak. “Extraordinary times require extraordinary actions,” Lagarde tweeted a few days later in a U-turn move, unveiling the Pandemic Emergency Purchase Programme (PEPP), an unexpected plan of €750 billion in bond purchases to calm down sovereign debt markets.

Despite sharing the same austere posture, the ECB has little in common with the Vatican. However, the feeling of having two “monetary popes” reigning in Frankfurt is sharp.

With Lagarde back on the trail of Draghi, did the message reach the leaders of the 27 Member States? Judging from the lack of forward-looking results produced by the video conference, it seems that it has not.

Similar to the 2015-2016 refugee crisis, the European Union finds itself once again in an identity crisis over the practical meaning of solidarity.

Reviving the European Stability Mechanism (ESM), the EU’s permanent bailout fund that offers loans to Eurozone countries under strict case-by-case macroeconomic conditionality, was put on the table of an earlier meeting of the Eurogroup. The informal gathering of the Eurozone financial ministers was tasked with preparing the decisions to be taken by the European Council. While some – like Italy – oppose the instrument also for domestic political reasons, the use of the ESM does not look to some like a new, courageous solution for confronting an unprecedented common threat to the bloc’s economies.

Italy, Spain and France have been vocal about the need to take new, urgent joint actions across the Eurozone, notably through the creation and issuance of a common European debt instrument to fight the socio-economic consequences of the pandemic. The so-called “Corona-bonds” have been staunchly opposed since their inception by the “frugal” countries (the Netherlands together with Finland, Austria, and Germany). Mirroring a milder approach in contrasting the health crisis outbreak itself, this “alliance” would not agree on refuting the sharing of debts taboo, but instead would leave softer measures such as the employment of the ESM as an instrument of “last resort”.

The tension was palpable, even though the meeting took place only virtually and without space for chitchat between leaders or press points in the entryway. As the Dutch officials reiterated their hostility to the Eurobonds, the Prime Minister of Portugal, António Costa, broke out by labelling their comments as “repulsive”, “senseless” and “totally unacceptable”, adding that such “recurring pettiness” is a serious threat to the future of the EU.

As a result, neither the Eurobonds nor the ESM are mentioned in the joint statement issued at the end of the European Council, where a deadline of two weeks has been set instead. Before it, the Eurogroup needs to bring new proposals, “taking into account the unprecedented nature of the COVID-19 shock affecting all our countries (…).” Given the Summit’s intergovernmental nature, there is little political leverage that other institutions, such as the European Parliament or the Commission, can add at this stage.

Are two weeks enough to win over the most traditional of all contrasts – that between North and South? Is it instead too much time at a moment when European citizens look at Brussels (and at their national capitals) craving for an unprecedented response to an unprecedented challenge?

The ECB is ready to do whatever it takes to save the Eurozone yet another time. Its pledge, however, might be unheard by national governments. While in self-isolation for having been in contact with a doctor who tested positive for COVID-19, and with an internal race to succeed her in full swing, German Chancellor Angela Merkel should take the time to reflect on her own political legacy, both at national and European levels. If she wants to be remembered as the leader who saved the European project from short-sighted national self-interest and mounting euroskepticism, the time to act is now.

“The cost of hesitation may be irreversible,” Draghi warned in his op-ed. This is especially true if we go beyond the (incomplete) fiscal and monetary profiles involved, by looking at the whole institutional picture of the EU, “which is more than just a sum of national governments”, as the Parliament’s President David Sassoli commented on Twitter.

The coronavirus crisis is first and foremost an existential challenge posed to a 63-year-old political project that swears to “be big on big issues”.

If not now, when?