Unless the EU helps its members through coronavirus, some will question what the union really means

Nations need to make sure they are sticking together during the crisis rather than squabbling, writes Hamish McRae

Leaders are considering common financial support for countries hardest hit (Getty)

Can the European Union help member states most gravely savaged by the coronavirus outbreak? Or is the real lesson of the past weeks that when there is a disaster countries are on their own?

As the deaths mounted in Italy and Spain last week, the eurozone countries’ leaders met at the European Council to consider whether there should be common financial support for countries hardest hit – and they decided to do nothing.

The specific idea was that there should be a so-called “coronabond” issue, whereby countries could borrow to support their national economies with the debt guaranteed by the 19 members of the eurozone. That was rejected by the Netherlands and Germany. Instead the bloc has asked its finance ministers to come up with some plans in two weeks’ time.

Unsurprisingly this has caused dismay in Italy and Spain, but also in France. The point was well put on French radio by Amelie de Montchalin, junior minister for European affairs.

“If Europe is just a single market when times are good, then it has no sense,” she said.

The Italian prime minister, Giuseppe Conte, made the same point. If it mismanages the crisis “the whole EU project will lose its raison d’être”, he said.

So why won’t they agree to coronabonds? Simply because that would mean the frugal north – Germany, the Netherlands, Finland and so on – guaranteeing part of the debt of the supposedly profligate south. Instead Angela Merkel, the German chancellor, proposed that the European Stability Mechanism, which was used to bail out Greece after the financial crisis, should be used instead. But this keeps any debt burden firmly on the country that does the borrowing. Greece’s economy has been shattered ever since.

The tough line has gone down well in Germany. The German electorate are worried that they might have to cover the debts of other, financially weaker, members. If this runs against European unity, so be it.

We are in the middle of this crisis, and it is hard at this stage to gauge to what extent the EU will suffer long-term political damage. It will suffer economic damage but so will the whole world. Maybe, because it has been a slow-growing region and it appears to be harder-hit than other parts of the world, it will suffer more. But the various national economies will eventually recover. Will the project?

Three points. First, Europe has come through crises like this before. The euro came within a whisker of collapse in 2012 before Mario Draghi, then president of the European Central Bank, said it would do “whatever it takes” to save it. He succeeded. Time and time again the European project has seemed to face huge odds, yet managed each time to scramble through. The political will to hold it together has always been strong enough.

Second, the fissure between northern Europe and southern Europe has become more explicit now than in the past, with this time France seemingly siding with the south. It will be hard for the north to resist doing something, though the scale will be inadequate to provide much debt relief. And once the virus threat does recede, all countries are going to end up with larger national debt than before. Italy, which after Japan has the largest public debt relative to GDP, is particularly vulnerable. The politics, however, will tip Europe towards more mutualisation of debt in the future.

Third, this is not just a financial matter. It is a one of vision: what sort of Europe do its people want it to be? It has been extraordinary the extent to which EU states have failed to help each other. It is China that has sent medical supplies and expert help to Italy, not the neighbouring EU countries. Russia has helped too.

You can say that these are gestures, designed by China and Russia to destabilise European political relations. They are that. But unless the European club can prove its membership adds value to a country, it should not be surprised if people question what the EU really means.