Today’s Covid-19 crisis starts to look more and more like a soccer match between two rival cities: where the supporters of two rival teams are facing each other and emotions are becoming expressive. The Covid-19 crisis hits all of us. People all over the world feel the impact to their daily lives. Not only on the social level, but mainly economically.
By Erwin Sanders
As a result of all the draconic social and economic measures people are forced to stay at home. Economies are being largely shut down. Consequently, people in the weaker economic European countries will feel the pain first. The crisis is already there.
After Italy, Spain is now the second European country that has been hit disproportionally hard. Both nations didn’t learn from the last financial crisis in 2008 and didn’t take important measures like creating a sufficient financial buffer to survive a new crisis like the one that is upon us.
Various southern European countries like Spain, Portugal, Italy and even Greece were asking to introduce the so-called coronabond, before the Covid-19 also known as the Eurobond. A relatively easy way for them not to go bankrupt. These bonds should allow states to raise funds on from the financial markets, for a limited amount of time, to help them get back on track. Meant to prevent some of the worst-affected countries being sunk by new debts the can’t repay. Is borrowing more money the best way for these countries to survive this new crisis?
The battle in the Eurozone is ongoing. In Northern European countries like the Netherlands we have a lot of taxation: on our income, on our goods, basically on everything. We are obliged to work longer and retire on a later age so we can all save more money for our pension.
In the Southern European countries this is less the case. They pay less taxes, have different rules and regulations for pension, etc. Should this not first be aligned before we introduce something like coronabonds? Otherwise we might end up in a situation again where we – Northern Europe – pick up the tab for the southern part of Europe like we did in 2008 with the global financial crisis.
An even more important question; will the heat, one day, be so high that the EU will fall apart and will proceed as northern and southern entities? Or are we doomed to keep on helping and financially supporting them crisis after crisis.
Lack of solidarity
Southern Europe accuses the North (especially my country Holland) of lack of solidarity. Italy, which was hit disproportionally hard by the Covid-19 crisis, leads the way. In an angry open letter, some mayors and opinion leaders wrote that the Dutch government lacks compassion for its tough line on EU measures to support countries hard hit by the corona crisis, and for showing a lack of solidarity to its fellow EU countries.
Fortunately, crisis negotiations this week forced the coronabonds off the table. At least for now. This week a messy compromise to unlock € 500 billion in emergency EU support for countries hit hardest by the coronavirus pandemic has been struck after Italy’s prime minister, Giuseppe Conte, warned that the existence of the bloc was at stake. Instead of Euro- or coronabonds we are now talking about a European 'Recovery Fund'. Who can still follow all this?
Most people in the Netherlands are not amused at all by all these developments. How much from this 500 billion is reserved for the Netherlands? It remains unclear. It is not that we do not want to help other countries and that we have a lack of solidarity, but what will be the next step?
Did the 2008 financial crisis and the current one does not just reveal that the financial discipline in Southern and Northern European countries is far apart that it is better to think of another way to work together?
We are always there
Right after the before mentioned letter Italy wrote, Holland offered 1 billion euros to the countries in the south which are suffering the most from this crisis. Hoping several other countries would follow suit. Money intended to be used for medical treatments and first economic aid.
In my opinion, it is now time for Southern Europe countries to listen closely to their Northern European counterparts. Listen how to build-up enough financial buffers to stay strong enough to survive the next crisis. Which will happen sooner or later.
How long will this debate continue? Into eternity, or is it maybe time to break up?
Erwin Sanders is positive young Dutch man. He is concerned with what is happening in the world, but he refuses to participate in the corona hysteria. He likes to stay optimistic instead.