(Bloomberg) – A “big day for European solidarity” – This is how Germany’s finance minister described last week the eurozone rescue package of $ 590 billion for the virus, although northern and southern Europe remain haggling the cost of cleaning up the economic mess Covid-19 left. The package would allow countries to borrow from the eurozone rescue fund, the European Stability Mechanism (ESM), for health care expenses without political restrictions and up to a certain amount.
The focus on money is understandable, given the impending recession that is supposed to be deeper than the 2008 crisis. But it hides a blatant failure of the European Union that may have worsened the human and financial cost of the pandemic: the lack of coordination and collaboration in health policies.
Despite having a common market, a (mostly) common external border and a common healthcare challenge to an aging population, the 27 EU Member States have dispersed like mice in the fight against the coronavirus. At the beginning of the crisis, Italy, the first and worst blow in Europe, begged its partners for masks and equipment, not money. The response was a series of border closures and the hoarding of medical supplies for domestic consumption. When France, Spain, and Germany instituted their own closures, it was clear that there would be 27 different responses to the coronavirus, not a “European” response.
Normally, the tone of the European Commission, the executive body of the EU, would establish the guidelines to be followed by the countries. However, health care policy is jealously guarded by national governments, which have never given Brussels technocrats full power to dictate how hospitals or medicine supplies are managed. The lesson from Covid-19, supposedly, is that the Leviathan-like nation-state knows more.
However, the current uneven death toll suggests that Leviathan is not always well equipped against epidemics. Countries that reacted early in relation to their Covid-19 outbreaks — Austria, Denmark, Greece — appear to be better off than those that reacted relatively late, such as Italy or Spain. An economical but decentralized country like Germany, which combines high intensive care capacity with specialized industrial health care companies, appears to be better than France’s centralized but well-funded system that transports patients by high-speed train to less affected regions to ease the burden. Some countries have better access to face masks and tests than others.
There are complex factors that seem to make one country more resistant to Covid than another. They go beyond a north-south divide, or health care spending as a percentage of GDP. Some factors, such as population density, cannot be avoided. But the EU should have been ideally equipped to combat many of these disparities. Properly funded information exchange and coordinated disease surveillance between countries would have enabled rapid responses. A set of medical supplies would have better allocated existing resources for things like test kits, face masks, and ventilators, while the combined purchasing power could have bought more for less.
It’s not just hindsight, but foresight: The EU should also be a contender in the global vaccine race, as it could pool national budgets to fund at least $ 30 billion in estimated research and manufacturing costs to get there. (It is also home to several drug manufacturers already working to achieve that goal, such as Sanofi from France or CureVac AG from Germany.) However, the bloc’s resources are often tied to bureaucratic red tape and bureaucratic silos, as the furious exit letter from EU top science official Mauro Ferrari indicated last week. His alleged drive to redirect € 2bn ($ 2.2bn) of annual long-term research funds to Covid-19 touched on certain sensibilities and resulted in a unanimous request for his resignation from the European Research Council. However, it is clear that redirecting the flow of money in a crisis is not the EU’s strong point.
At this time, understandably, it is difficult to adhere to the motto “more Europe”. In fact, few Member States will rush to transfer more powers to Brussels. But existing tools can and should be strengthened. Nine EU countries, including France, Italy and Spain, explicitly called last month for the Commission to do more to establish common guidelines and share data and information. They could start with the European Center for Disease Prevention and Control, which has a negligible budget of about 60 million euros, a far cry from the US equivalent budget of $ 11 billion. Medical equipment and testing capacity must be funded across the block as closures begin to lift. That may well require an increase in the EU budget.
Not all forms of top-down control make sense in this crisis: regional health authorities have led the way in some countries, more so than even national governments. But as Joan Costa Font of the London School of Economics says, collective action between countries is obviously beneficial in the face of a pandemic that does not respect borders, especially in the EU, where a highly integrated economy means that it is in the interest of all countries to have healthy neighbors. If the focus on money fails to spread the burden of health information and resources, the way out of the emergency shutdown will be long for European states.
Original Note: The EU’s Big Pandemic Failure Isn’t About Money: Lionel Laurent
For more articles like this, please visit us at bloomberg.com
© 2020 Bloomberg L.P.